Starting a stokvel
Experts say it’s important to lay a proper foundation for your stokvel, writes Mpho Diale
BACK in the 19th century, stokvels were called stock fairs and used by English settlers in the Eastern Cape to hold rotating auctions. The stock fairs were then adopted by locals and called stokvels, where they would pool together their resources to trade livestock. Fast forward to today, stokvels now help members bury their loved ones and save money for rainy days.
ESTABLISH YOUR CULTURE
Although they also serve a social purpose, stokvels are organisations and as such, there are factors that need to be considered when starting a stokvel.
Kedibone Mooi, who is an executive coach who works with institutions such as GIBS Business School, shares valuable insights about what you need to put in place when starting a stokvel. She says, “Every organisation has to have a culture. When people come together to be part of any organisation, they need to have a foundation that brings them together.
This foundation should be their common purpose, so you need to define why you are starting an organisation and how people who are part of that organisation need to behave.”
She adds that you establish an organisation’s culture by establishing
values, which are non-negotiable beliefs about what holds an organisation together.
These can include the mission of your stokvel and how members should treat each other.
Values also inform the decisions that your stokvel makes. For instance, if your stokvel is an investment club that only expects financial rewards in five years, money cannot get out of your account for personal emergencies like a member needing a loan on a rainy day.
When setting up your values, make sure its a discussion that involves all members, and that once you settle on your core values, they are clearly communicated to all members.
WHY YOU NEED VALUES
As Kedibone explains, “Values are your anchor.”
Values hold an organisation together and help you make the right decisions for your stokvel without getting into conflict about how you handle issues that will surely arise.
Values define the core of your existence, so everyone in the stokvel knows why they are in it, what their role is and how to best serve the stokvel’s mission and vision.
“In your discussions, ask yourself: why are we here? It’s easy to attract people, they key is in getting people who are able to deliver,” Kedibone says.
Kedibone says, “it’s not what you want, but why you want it. There must be passion and an understanding of why you exist, the needs you are serving and who you will serve them to.”
Values should form part of your constitution, which is a set of rules that will govern your stokvel. This important document should include guidelines such as: ■ How many members do you want to have in your stokvel? ■ How often and in what manner should money be collected each month? ■ How will the money be saved or invested? ■ Under what circumstances should withdrawals be made? ■ Who are the signatories at the bank? ■ What happens if a member fails to make contributions or decides to leave the stokvel? ■ What happens if a member dies? ■ Whats the process if a new member decides to join the club at a later date after inception.
Banks usually require a stokvel account to have three signatories.
TIPS FOR YOUR STOKVEL’S SUCCESS
■ Understand what you need to achieve. For instance, all members must be able to afford the monthly payments. ■ Understand what your stokvel is about and how you can maintain the growth of your group. ■ Keep records of everything in your stokvel, especially financial transactions.
OTHER FACTORS TO CONSIDER
According to Mike Brown, managing director of an investment company called Exchange Traded Funds SA, “Every group needs a structure for it to operate efficiently.”
He recommends having a committee (ideally consisting of a secretary, chairperson and treasurer) or appointing someone within the group who has experience in administration to handle the day-today running of the stokvel.
“For a stokvel to serve its purpose to the best of its ability, it needs to have a few people who are prepared to do the work; like going to the bank, consulting with financial planners if its an investment club and other things that need to be done beyond just gathering to socialise and collect money,” he says.
Form a stokvel with people who are in your life, like your neighbours, colleagues, friends and family. There must be a sense of community and every member must be trustworthy so your purpose is never compromised. Forming a stokvel with people you know also limits conflict in the group.