Weekend Argus (Saturday Edition)
Stokvels currently worth a growing R50 billion
Many members are now using money to buy property
THE UNIQUELY South African stokvel concept is fast evolving, and is now being considered as an alternate way to buy property.
About 11.5 million people in South Africa belong to more than 800 000 stokvels which are currently worth almost R50 billion.
It is little wonder members are looking to invest in property as they realise just how much money they hold, and the kinds of returns that brick and mortar investment can bring them.
Stokvels, a form of savings scheme, were started more than 100 years ago by black South Africans as a way of helping them stretch their money in difficult times, and they became an important part of black culture.
Today, one in two black South Africans belongs to one, says businessman Neo Mohlatlole, who is also the co-founder and director of Stokvelex, an exhibition targeted at the stokvel market.
About 6% of South Africa’s stokvels are in the Western Cape, according to the National Stokvels Association of South Africa (Nasasa).
Speaking at the recent Independent HOME Property Summit in Durban, Mohlatlole says about R30 million is paid from stokvels at the end of the year for groceries alone.
He says a new crop of stokvels aimed at leisure and travel savings is emerging.
“Stokvels were started as burial savings models, but when members realised people were not dying, these evolved into education stokvels for their children,” he says, adding that when members did die, money was left behind for their burials.
Once the children graduated, the money made from stokvels was used by members to fix and extend each others’ houses, Mohlatlole says.
“After this, they used the money to travel.”
Today, the next generation is continuing the tradition, but their aims are evolving.
“There are stokvels buying properties in the Joburg CBD.”
The process of buying properties with stokvel money can be a little complicated, with lawyers often recommending that members convert their stokvels into trusts.
Mohlatlole says this is not an option because the taxes involved are too high.
For this reason, stokvels looking at buying property are being converted into co-operatives.
On a wider South Africa scale, property purchasing is still very new and relatively rare, so Mohlatlole says conversation about the potential for stokvels to invest in property is “the key”.
“There are opportunities for stokvels to be used as alternate ways to buy property, but members first need to be educated about the benefits of investing in property.
“Interested stokvels can then be converted into property co-operatives, and then those that qualify can be introduced to property developers and city rejuvenation programmes.”
Using the Amadyani Stokvel as a case study, Mohlatlole says each of the eight members, including accountants, lawyers, and engineers, contribute R2 000 a month to the stokvel. Their current purse of savings is R440 000.
“The stokvel has been active for four years and owns two flats in Berea, Joburg. It lets these to students.
The opportunity for them is to acquire more properties. The city centre has affordable buy-in options with high rental demands.”
Mohlatlole says the country’s banking institutions need to talk to stokvel members to ascertain what kinds of savings products they need.
This is to encourage stokvels to save their money with banks, and not keep it in their homes.
He says buying property through stokvels is the only way that ordinary black South Africans – not politicians or businessmen – can play an active role in property ownership in the country, and thereby truly transform it.
‘R30m goes on