In the 1800s, English settlers in Eastern Cape held rotating cattle auctions known as ‘stock fairs’; these fairs later became known as ‘stokvels’ by the locals who traded livestock.

Today stokvels are community-based savings or investment schemes – traditionally made up of a group of people with the same saving goals. Each member contributes an agreed-upon amount on a regular basis. Today we find that stokvels – previously confined only to rural areas – are becoming more upmarket, with people across the income segments making use of this saving vehicle.

According to Riaan Appelgrein, senior manager for customer financial solutions at Standard Bank, more people are adopting the principle of community savings. “What is obvious is that savings and investment clubs are now becoming more and more common. At Standard Bank, we see stokvels being formed to help members participate in various investment vehicles, including property and the JSE.”

Women Empowerment

Stokvels, to many South Africans, are more than just savings tools – they encourage a culture of saving, provide a sense of community and accountability to its members, all the while acting as a safety net and allowing for much needed cash injections during the hard times.

These stokvels also serve as powerful weapons in the fight against poverty, and are particularly helpful in uplifting women in communities.

Stokvels lead to empowerment and breaking the cycle of dependency. Jeanne du Plessis, communications manager at Procter & Gamble (P&G) says, “Stokvels have become key in developing the money-saving habits of South Africans, particularly women”.

Du Plessis also states that, “With the majority of stokvel members being women, P&G recognises that stokvels are an important vehicle for women empowerment, as they promote economic independence, income generation, security, and responsible behaviour. Women are able to move away from being financially dependent on their male counterparts as they learn more about managing money and creating wealth. They can also contribute more to their family’s financial wellbeing as they grow in knowledge and confidence”.

Zeona Jacobs, Director of Marketing and Corporate Affairs at the JSE, says stokvels are a powerful tool to create a stronger investment and saving culture in South Africa and improve financial literacy. “The JSE hosts seminars to help stokvel members understand how to start investing on the stock exchange and are mostly attended by women. Many stokvels simply pool money together. This means that these women are not saving in the most effective way as their money could be invested to generate returns. If we can help stokvels to become investment clubs, they can help women to move from the informal to mainstream economy.”

But Jacobs says stokvels are not just about pooling financial resources. “Stokvels create an opportunity for women to learn from each other. At the same time, if one or two members of a stokvel are educated about investing on the stock exchange, the entire group benefits from this knowledge.”

Types of stokvels

All stokvels serve the purpose of encouraging people to save, however, stokvel membership depends on individual needs, thus making up the different types.

In a savings stokvel a fixed amount, agreed upon by the members, is thrown into a common pool and members decide on the cycle – i.e. who will receive the funds and on which dates. According to BrandSA, these types of stokvels are the most popular as people have disposable income to do with as they please.

The costs of funerals are exorbitant. Burial stokvels provide support to members in the event of a death in the family. Members of a burial stokvel make a fixed contribution that will assist with expenses.

Most popular stokvels

• 47% of people using stokvels belong to a savings stokvel
• 41% of people using stokvels belong to a burial stokvel
• 20% of people using stokvels belong to a grocery stokvel
• 5% of people using stokvels belong to an investment stokvel

From informal stokvel to cooperative bank

Nthabeleng Likotsi, founder and managing director of the Young Women in Business Network (YWBN) and Masters degree graduate from Wits Business School founded YWBN in 2009 – initially a stokvel-modelled investment initiative – now grown into South Africa’s first black women-run cooperative-banking financial institution (CFI).

This women-run CFI caters to black professionals, entrepreneurs, SMMEs and business startups. Three years after the establishment of YWBN, the bank acquired a stake in Namlog, a Johannesburg-based logistics company.

Said Likotsi, “After a chance meeting with a woman at a conference in Switzerland, the world of cooperative banking dawned on me. When I returned home, I researched on the feasibility of starting the bank”.

Today the bank consists of 252 members, has more than R2-million in its coffers and is South Africa’s 31st cooperative financial institution.

The numbers

In a study done by African Response – an inclusive market research company – stokvels are big business. In South Africa there are approximately 8.6 million people belonging to over 421 000 stokvels, collectively valued at R25-billion.

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