More than just saving vehicles
STATISTICS show that South Africans don’t save much. Truth is, they do. Saving through a stokvel is also just as good as having a banking account.
A stokvel is a savings or investment group – usually made up of like-minded individuals with similar goals – to which members regularly contribute an agreed amount. The group then decides on how that money is shared, whether that is a monthly pay-out or invested then shared at the end of the year.
Some stokvels even invest their money in long-term investment products such as property or a business venture. The financial institutions refer to stokvels as ‘informal savings’.
Informal because the group does not necessarily have a bank account, mainly relies on verbal agreement to save and/or does not have contracts that bind people to the stokvel.
This is how stokvels have always worked as people who are largely banking on mutual respect and trust of each other. There has never been any reason to doubt that anyone person will not honour the promise of making a contribution. This stokvel character is truly what gives it an “unbankable” value and I wish people would never lose that.
Did you know that there are more than 421 000 stokvels in South Africa? Well, this is according to research company African Response. There are 8.6 million individuals belonging to these 421 000 stokvels and they have a collective value of R25-billion.
It is clear that stokvels have become very big business but what I really love about stokvels is the inclusivity of everyone from gender, age, social or economic class it does not matter who you are as long as you opted to be in a group that will accept you.
Today, some groups are even called by names such as “umgalelo, mogodisano, masiqwabisane”, but the fundamental principles remain the same according to African Response.
For many South Africans stokvels have become more than just savings vehicles, they are a safety net, providing a muchneeded cash injection when times are tough and also a social network that can offer help and advice when needed. Stokvels have also become an important means of fighting poverty and helping poor people stay out of debt, helping to reduce their reliance on loan sharks.
“Some of the reasons people join stokvels include: covering the costs of funerals (burial society), buying groceries in bulk, especially around Christmas time, saving towards the purchase of household items such a TV, fridge or a deposit on a car, buying property, investing in a business, or buying stock or equipment for a business, savings towards a holiday, for a child’s education, or as a general investment,” says Mamapudi Nkgadima, managing director at African Response.
The government has acknowledged the important role of stokvels in our communities and this has caused the banks to also offer formal savings products and processes to assist stokvels in keeping their money safe, while earning interest.
Using the same figures that African Response has provided, here is something I find puzzling. It is said that out of the more than 421 000 stokvels which exist today, only 41% of them have bank accounts. This means there are about 173 000 stokvels with formal bank accounts and a value of approximately R10-billion.
Where is the rest of the money (about R15-billion) and the stokvel groups (about 248 000) groups? What are they doing with their cash? I am not suggesting that they must have bank accounts, but I am curious to know how they save their money or what they do with the cash.
If the R25-billion statistic is true, then why are so many people still in so much debt and are still struggling to make it in their lives? When are you going to be sick and tired of not having money? Till when are you going to be in debt? It pains me to even see retired people that are still debt.
I am therefore inviting all interested stokvels, community representatives, churches and all individuals interested in this topic, to write to me so we can have an indaba about our roles in stokvels and find real solutions to this money plight.