In approximately 40% percent of South African households, women are responsible for managing the family budget, household expenses and planning and saving for the future…

This also explains the massive growth and popularity of Stokvels throughout the years.

The South African stokvel sector is massive and caters towards significant financial resources. According to African Response in 2019, stokvels are big business, comprising of nearly 11.6 million people belonging to over 552 046 stokvels collectively valued at R49,5-billion.

What exactly is a Stokvel?

According to the National Stokvel Association of South Africa (NASASA), “A Stokvel is a type of credit union in which a group of people enter into an agreement to contribute a fixed amount of money to a common pool weekly, fortnightly or monthly.”

An article by The Conversation, says that the stokvel sector in the country “holds an estimated R49.5 billion in member savings and has some 11.6 million participants.”

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A number of South African banks offer Stokvel accounts for group savings. They also offer various benefits including burial cover and fee discounts.

Opportunities for women to save, invest & pay for unexpected expenses

“Stokvels create a community for women and an opportunity for them to save, invest and learn valuable life lessons from each other,” says Tshiamo Molanda, Standard Bank Personal and Business Banking Head of Client solutions, Everyday Banking.

“If well equipped with the right financial skills and education, these society schemes have an opportunity to mushroom into great investments, which empower the members. It creates a solid foundation when planning for education, unexpected expenses, investing in a home or planning for a family like a wedding or a death in the family.”

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Stokvels are a powerful tool in the fight against poverty and are particularly helpful in uplifting women and breaking the cycle of financial dependency.

Types of stokvels

There are various reasons why people initiate or join a stokvel or society schemes. The whole premise around Society schemes is to save or invest as a group to leverage the compounding interest on the funds. Below are some of the popular stokvels that South Africans make use of:

1.     Savings stokvels

In a savings stokvel, a fixed amount agreed upon by the members is added into a common account. The members decide on the terms e.g. saving from beginning to end of the year in an account or a rotation of fund payouts where members alternate to receive a predetermined lump sum.

2.     Property stokvels

These have recently gained popularity among high-income earners as well as younger savers and aspiring investors who realise the power of pooling funds for investment. Many have calculated that stokvels can be used to enhance investments in property and other asset classes that may have not been possible to achieve individually.

3.     Burial stokvels

The goal of a burial stokvel/society scheme is to act in the same way as a funeral policy that pays out immediately to help members cover funeral costs in the event that they lose a loved one. The funds are pooled together and released when required by one of the members.

The gap

Members tend to focus on short-term goals and fail to invest for the long term. If managed responsibly, stokvels can be a great way to protect finances and create generational wealth. An example of the potential that lies in stokvels and the powerful role that women can play, is the Young Women in Business Network.

This innovative group of women have used the stokvel model to their advantage by rotating credit and embarking on a savings scheme to register as a cooperative financial institution.

“It is definitely possible to turn stokvels into vehicles that create wealth in the long term. The community spirit and sense of empowerment have the potential to transform people’s financial future, but this can only be achieved through financial education and empowerment of members,” concludes, Tshiamo.