THE STOKVEL STORY
SA’S household savings rate looks much healthier than official projections once you factor in alternative ways of saving
In just 18 months, the People’s Stokvel, a group-savings scheme that invests in small businesses, managed to collect its first R1m from ordinary South Africans saving just R100 per person each month.
This is no ordinary stokvel, where the bank that offers the highest interest rate will get to be the custodian of these savings. Instead, the money remains in the community, filling a lending gap that exists because banks deem some small businesses too risky to bet their depositors’ money on. The People’s Stokvel is a modern crowd-funding initiative that pools big sums of money, but it also contributes to the pool of savings that go unaccounted for in SA’S financial system.
The SA Savings Institute (Sasi) rang alarm bells during “savings month”, in July, about the rising rate of “dissaving” among South Africans.
Dissaving is a broad term the financial services industry uses to explain not only how people are not putting money aside for future use, but also how they are using debt and past savings to fund consumption.
As Sasi reminded us, data from the Reserve Bank shows that SA had a negative household savings ratio, of -0.5% of GDP, at the end of 2018.
But that only factors in traditional household savings, as measured by the difference between households’ disposable income, which lands in their bank accounts, and their final consumption expenditure. If you include “alternative savings” — stokvels, the funding of start-ups and property, for example — SA’S households savings ratio probably sits at a substantially higher 5.6% of GDP, says economist Mike Schüssler.
The problem is that once people put money into these alternative investments — once the funds leave their bank accounts — the funds are recorded as spending rather than as savings, says Schüssler.
Even buying a property, while it’s an investment, is recognised as spending in the calculation of household savings. Similarly, it is classified as spending if a stokvel invests its members’ money directly into a small business or assets.
“The only time a stokvel is recognised as saving is if the group puts the money in a bank once it’s collected,” he says.
Stokvels account for a substantial proportion of savings. The National Stokvel Association of SA estimates that more than 11.5-million individuals belong to about 810,000 stokvels, accounting for a market of about R49bn.
So while there’s no dispute that many South Africans live beyond their means, says Luyanda Jafta, founder of the People’s Stokvel, “there are just as many people saving through stokvels”.
Tshepo Moloi, the founder of stokvel app Stokfella, agrees.
“The savings culture is there in SA. It really depends on what numbers you look at,” he explains. “We live in a country where a lot of people are still trying to get their basics. They’d rather pay their stokvels first before they even pay their accounts because of the social pressure.”
Moloi started Stokfella as an administration platform for group savings schemes. Since then, it has evolved into an online club savings account, competing with banks and formal investment products for its share of consumers’ wallets.
While some of the money Stokfella attracts may go into traditional savings accounts, or be invested in Satrix, some stokvels choose to put their members’ money into funding the working capital of small businesses.
And while many people contribute small amounts to their stokvels, Moloi