Systems similar to stokvels are used throughout the world.
The number of South Africans holding stokvels is expected to rise in 2023 amid market volatility, says National Stokvel Association of South Africa (Nasasa) president and founder Andrew Lukhele.
With a membership of 11.4 million by 2022, the savings scheme has been valued at over R45 billion per year and has become increasingly popular with South Africans. Some 810,000 stokvels were registered in the Nasasa database in 2022.
Speaking to News24, Lukhele says savings schemes like stokvels have historically been used when people have experienced difficult economic climates, including during wars and pandemics.
What are Stokvels?
“The term ‘stokvel’ derives from the cattle auctions or stock fairs of English settlers in the Eastern Cape in the early 19th century,” Lukehele explains.
It is a financial scheme where individual member clubs contribute money each month in a lump sum. This lump sum can be given to a club member on a weekly, fortnightly, monthly, or even yearly basis. Members may also receive a lump sum of their monthly contributions at the end of each year.
“Stokvels, or savings clubs, have been around for generations, creating mini-communities where like-minded people can meet regularly to socialize and support each other in keeping up with monthly contributions,” according to Sisandile Cikido, director of retail investment at nedbank.
Different types of stokvels are offered, including rotating stokvel clubs and grocery stokvels. It is a phenomenon that exists worldwide, according to the Nasasa website. Similar financial systems include tandas in South America, kameti in Pakistan, and tanomoshiko in Japan.
financial pressures
Following the financial pressures of the pandemic, many South Africans turned to stokvels as a way to save money. According to the Old Mutual Savings and Investment Monitor in 2022, informal savings and stokvels “remain popular and continue to attract significant inflows.”
The survey found that the average monthly contribution to Stokvels increased from R1,213 in 2021 to R1,384 in 2022, an increase of 14%.
“South Africans are notoriously poor savers, which affects the economy as a whole, as well as the ability of families to weather hard times. As we saw during the [Covid-19] lockdowns, stokvels helped many people survive the catastrophic loss of income,” says Cikodo. These financial pressures may continue to mount in 2023 as many South Africans are currently experiencing financial difficulties due to rising cost of living and rising rates of interest.
Advantages of Stokvel
As a financial scheme, stokvels have many advantages that are attractive to South Africans, according to Lukhele.
“They are reliable, approachable and understanding of members’ needs and difficulties and can help in emergency situations when money is needed quickly because they are flexible and accommodating,” he says.
