Many South Africans are a product of stokvels. Children have been sent to school, family members have been buried in a dignified manner, families have been fed, and society has progressed as a result of stokvels.
According to Liberty, the stokvel industry is worth over R50 billion annually. Here, we’ll discuss the importance of these small organisations and how they have maintained relevance over so many decades.
What is a Stokvel?
A stokvel is a group or club where members voluntarily agree to regularly save a fixed amount of money. In some instances, members will receive their share of the money on a rotational basis; hence, stokvels are sometimes referred to as a rotational savings club.
The History of Stokvels and Why They’ve Lasted So Long
Stokvels previously lacked formal recognition and were said to be illegal as they operate as a deposit-taking institution, but were granted an exemption from the Banks Act in 1990. However, over the years, they were able to legitimise themselves with the help of the National Stokvel Association of South Africa (NASASA). NASASA is a regulatory body that assists in the management of stokvels.
While there’s no set time as to when stokvels began, the term was influenced by the practice of “stock fairs” that started to take place in the Eastern Cape in the early 19th century. Stock fairs were a gathering, typically attended by farmers, where English settlers would auction their cattle.
In a survey by Ngcobo & Chisasa (2018) to determine gender participation in stokvels, 52,3% of participants were female, with males making up 45,1%, and 2,6% not disclosing their gender. The survey revealed that the majority of stokvel participation is among women.
This can be traced back to the 1930s, when South Africa witnessed a massive rural-urban migration of women who were coming to the city to join their husbands who worked in mines. Women typically participated in stokvels as a means to create some financial security, as they were poor and unemployed. They would invest the little they had in stokvels. This was also the case for women who worked, as they did not earn much.
Types of Stokvels
Stokvels are commonly known through some of the popular clubs, such as rotational savings clubs, grocery society stokvels, or funeral stokvels. However, did you know that there are other means for stokvels, like using a stokvel to fund a business? There are also various other types of stokvels that have been formally recognised. The different types of stokvels are as follows:
Savings Clubs: Savings clubs are where members of the club make monthly contributions. In this setup, they tend to receive a lump sum amount once a year. Members send in their money to a designated member who’ll deposit the money into an account at a bank or an accredited financial platform.
Rotational Stokvel Clubs: In a rotational stokvel, there’s a fixed amount of money contributed by each member every month. Each member then gets a turn for their money to be handed out to them monthly.
High-budget Stokvel: The meaning behind high-budget stokvels is in the name. This type of stokvel is for high-budget participants and isn’t often accommodating of people with limited financial means. Individuals who participate here are typically educated individuals who are between the ages of 31 to 49 years of age. While social fulfilment is a factor in this kind of setting, savings and investment take the upper hand.
Investment Stokvel: In an investment stokvel, the aim is to raise funds through investment. There are several ways to do this; they can either invest through the bank, a business venture, or purchase stocks.
Burial Society Stokvel: A burial stokvel aims to help members bury their loved ones. In this instance, the stokvel operates in a similar manner as a funeral over, whereby members have a list of beneficiaries, make monthly payments, and claim upon the death of a loved one.
Grocery Stokvel: A grocery stokvel is where two or more members contribute funds on a monthly basis to buy groceries in bulk once a year. Platforms like NASASA allow you to handle your grocery stokvel through their platform, where you can order your groceries and have them delivered to your home.
