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Stokvels: Social element critical

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Women count money at a Stokvel meeting in Nhlazuka. (John Robinson, AP file)
Women count money at a Stokvel meeting in Nhlazuka. (John Robinson, AP file)
Johannesburg - “Stokvels are group saving schemes providing for mutual and financial well-being as well as social and entertainment needs,” according to a paper published by African Response in May 2012 (Stokvels - A Hidden Economy: Unpacking the potential of South African traditional saving schemes).

The stokvel seems to take its name from the 19th century stock fairs, which were an opportunity for farmers and labourers and their families to meet.

A stokvel involves a number of people agreeing to meet regularly and make financial contributions to be saved or used for an agreed objective. This is very similar to the old ‘building society’, which began as groups of people saving to enable each of them to build their own homes.

The social element of the stokvel is critical – catching up, chatting, eating and drinking. Although today you will see advertisements recruiting people to stokvels, stokvels traditionally have been recruited from existing social circles or other networks such as colleagues at work, members of a church or people with shared interests. Mutual trust is the foundation of a stokvel.

Nearly 11.5 million South Africans belong to stokvels in South Africa; together, according to Stokvels – A Hidden Economy, they save R44bn a year. 

There are five main types of stokvels: general savings is the largest group of membership, followed by burial society and grocery, with birthday and investment stokvel being the smallest. (Grocery stokvels are generally saving for a once- or twice-yearly bulk-purchase of staples that can be held in reserve, to take advantage of savings made on bulk buys.)

The National Stokvel Association of South Africa (Nasasa) has another categorisation based on how the funds are disbursed. This gives us four main categories: basic revolving savings schemes, loan schemes, home loan schemes and shared buying schemes.

The stereotype has it that stokvel members are middle-aged women, but in fact, research shows that almost as many men as women belong to stokvels, especially in the four provinces that dominate stokvel distribution within South Africa: Gauteng (24%), Limpopo (20%), North West (11%) and KwaZulu-Natal (14%) - altogether 69% of all the stokvel population.

Men are, however, more likely to belong to stokvels focused on investment and burial.

Stokvel members mostly fall within the age group 25 - 49, but people as young as 16 and much older than 50 belong to stokvels.

Twenty percent of stokvel members belong to the highest LSMs (Living Standards Measurement), and the majority are in gainful employment.

Many stokvels have quite a formal structure, with about a third of those in the largest groups, Savings and Burials, having constitutions. Quite a significant number have elected chairs who run the meetings and follow an agenda.

In most cases, unless the money collected is immediately disbursed to meet the objectives of the stokvel, the money is deposited in the stokvel’s bank account.

Interesting fact

The first recorded stokvel (called a ‘bantu burial scheme’) was in 1932. Since then, stokvels have gone by many names, including mohodisana (a Sotho term meaning ‘paying each other’) and the Zulu version, kuholisana, gooi-gooi, from the Afrikaans word ‘throw’, indicating the money thrown in the pot, and makgotlas meaning burial societies.

- Fin24

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