SA is saving - but not the Western way

Adiel Ismail
2013-08-09 11:57
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Women count money at a Stokvel meeting in Nhlazuka Women count money at a Stokvel meeting in Nhlazuka. (John Robinson, AP file) ~ AP
Cape Town - Contrary to many reports, South Africans are saving - they're just not doing it the Western way, Mamapudi Nkgadima, managing director of African Response, told Fin24.

A stokvel is one of the most popular savings vehicles among South Africans, with members investing more than R44bn each year, said Nkgadima.

While South Africans generally have low levels of personal savings, stokvels make it easier for people to save, said Audrey Mothupi, head of inclusive banking at Standard Bank.

According to the Reserve Bank, households saved an amount of R72bn, indicating a savings rate of 1.7% over five quarters to June.

Mothupi said stokvels encourage savings discipline, because they are group savings schemes.

“They allow people to meet their financial needs – whether it is for groceries, school fees, home improvements, or a funeral – in a way that suits their lifestyles."

She said members also get to share their financial lessons with others because of the group set-up.

The latest research by African Response showed that in 2011 the average South African stokvel had 27 members and each member contributes about R210 a month.

Nkgadima said the survey, which will be repeated this year, cut across race, age and socio-economic barriers.

Saving the South African way

She said the study proved that people are saving, but that they are just not using Western methods.

"The backbone of stokvels is based on trust", Nkgadima said.

However, she also cautioned that at times members borrow money - which incurs interest - to pay their stokvel in order not to disappoint other members.

The last study found that there are 350 000 savings stokvels with a membership of 5.4 million people saving about R25.41bn annually.

The data further indicated that there are at least 179 000 burial society stokvels meet the needs of 4.7 million people and contribute R8.2bn to burials.

At a subsistence level 129 000 stokvels accumulate about R4.65bn a year for the purchase of groceries for 2.3 million people.

There are at least 38 000 investment stokvels, serving an estimated 1.7 million members investing R2.16bn in different instruments including savings accounts.

One of the interesting observations outlined by the survey found that stokvels are also used by the youth.

Birthday stokvels were made up mostly of younger members, with 66% falling into the 16–34 year age category.

Over half of stokvels (66%) have a stokvel bank account where contributions are deposited and saved.

"They are therefore an important part of the local economy and will continue to be so for the foreseeable future,” added Mothupi.

 - Fin24

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