South Africa's pioneering study of stokvel groups and their buying power
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South Africa's pioneering
study of stokvel groups
and their buying power
Advert No - 4099529
July 27 - 29 2018
II
Navigating its
other members, or in their pri- sights into Stokvels. Over the
vate or individual capacity. The next few weeks we look forward
“I am, because we are” philoso- to taking brand owners and mar-
phy often overrides individual keters interested in customised
preference for certain brands, sessions on an insightful journey
complex culture
products or services when those into the stokvel phenomenon.
holding the purse strings need to We’ll provide demographic
make the best choices for a larger and geographic descriptions that
group. The ability of marketers contextualise the various stokvel
to understand these motivations types, from burial societies that
and nuances should not be un- focus on funeral cover or ser-
An insight into the regular basis – to create a savings
pot that can be shared for a vari-
derestimated.
With this in mind, we’re very
vices, through to money, saving
and grocery stokvels. We’ll also
stokvel ‘sector’ ety of common purposes. Trust,
commitment and responsibility
excited to once again partner
with African Response in pre-
share insights into savings that
get funnelled into investment,
Ubuntu is one of those uniquely are the shared values that bind senting the annual research of birthday and holiday stokvels.
African concepts that, for many, members together. the South African stokvel envi- Importantly, we’ll also high-
define what it means to be South The stokvel phenomenon is ronment. African Response is light relevant brands and busi-
African. A beautiful word that one that is proving complex to the leading and pioneering mar- nesses mentioned by members
exemplifies a philosophy of car- navigate for retailers, brands, ket research agency for stokvel when choosing how and where
ing for the welfare of every indi- and those in the banking and in- groups, and has conducted a to spend or invest their money.
vidual in a community – that surance sectors, and is under- range of qualitative and quantita- Tiso Blackstar and its titles
special acknowledgement that “I standably drawing their increas- tive surveys to assist businesses have a reputation for delivering
am, because we are”. Ubuntu is a ing interest. Here’s why: to develop stokvel strategies over credible, transparent news
spirit that ignites people to work These small close-knit groups the past seven years. where readers find a safe, pro-
together, for the benefit of all. have a significant impact on the The survey is nationally repre- tected space – online and in print
We live in very exciting, yet country’s bottom-line. Nearly 12- sentative, with a randomly se- – where citizens trust what they
challenging times as South million South Africans partici- lected sample of 2,500 respon- read. Thanks to the leadership of
Africans. We’re all striving for a pate in 440,000 stokvels that Reardon Sanderson, group GM: dents. Thirty percent of the sam- our editors, fearless journalists,
better future … where team work plough R54bn into the economy Sales and Marketing at Tiso ple covered small towns, rural an unwavering dedication to edi-
and ubuntu are essential. It annually. It’s an incredible sav- Blackstar Group. and deep rural areas whereas torial integrity, and a desire to
should come as no surprise then ings discipline that comes from the balance covered large towns, build a healthy democracy, our
that the stokvel phenomenon necessity and represents a cities and metropolitan regions. titles are the go-to platforms for
has become such a large part of formidable spending power. the purposes and motivations for The survey was designed in line advertisers to extend the reach of
our culture: the stokvel is “eco- And this is why marketers are stokvels may be vastly different, with the national urbanisation their brands. Tiso Blackstar’s
nomic ubuntu in action”. sitting up. and thus marketing approaches rate of 64% (Statistics South support of the African Response
Stokvels are the most promi- It’s the informality and diversi- need to be fitted accordingly. Africa), with the data weighted Stokvel Survey is evidence of our
nent informal savings and in- ty of the stokvel “sector” that is In addition, it’s important to to the 2017 mid-year population commitment to deliver value for
vestment mechanisms in the challenging for businesses understand that stokvel mem- estimates, which found that advertisers.
country. They’re regulated by which traditionally operate on bers may also act or respond dif- 31.2% of the 56,5m South Please join us in learning and
small, intimate groups of friends volume and value principles. ferently to brands and advertis- Africans are 16 years and older. celebrating the power of the
and family committed to con- While the purchasing power of ing, depending on whether In this survey we provide an stokvel, and sharing the spirit of
tributing an agreed amount on a the stokvel collective is strong, they’re purchasing on behalf of overview of some of the key in- ubuntu.
Research aimed at
Taking stokvels
ten hear comments and reports
saying South Africans don’t save
enhancing them or South Africans are saving in-
formally, which is not considered
good. How true is this?
into the future
As a Stokvel member, a marke- It is high time we debunk
teer and a researcher, I was al- some of the myths and percep-
ways curious about the group dy- tions about stokvels and start to
namics and motives: who was see the value and importance of
actively playing the stokvel stokvels. The focus should move
game? How were people playing away from wanting to capture a
this game? Was it a game? What vant; why is it critical to build on- different sectors such as retail, share of the stokvel market, but
value was being realised? Who to stokvels and not only want to consumer goods and financial rather to amplify the stokvel way
was benefiting? How big was “capture them”; and who is win- services. There are several es- to create an even better value
this whole stokvel movement? ning in this space, and what have sential and non-negotiable at- through collaboration, relevant
Was it a growing or a declining they done to achieve success? tributes of stokvel groups that education and co-creation of so-
movement? There were a lot The name stokvel originates continue to challenge conven- lutions that address challenges
more questions than answers. from the term “stock fairs” dat- tional, if formal, business prac- for stokvels.
My curiosity was calmed in ing back to the 19th century, as tices: Stokvels continue to evolve
2011 when African Response, a the rotating cattle auctions of En- A stokvel is a platform where and are playing a significant role
company I was leading, agreed glish settlers in the Eastern money is exchanged between in empowering millions of South
to fund a research project to un- Cape. The practice was a collec- members without incurring Africans.
pack the realities and dynamics tive platform to sell cows leverag- transaction or service fees. In- Join African Response, in col-
of stokvels. ing on the “economies of scale” – stead often used to increase the laboration with Tiso Blackstar,
The insights and knowledge that principle still drives the collective pool of funds through a on this stokvel journey over the
gained through personal experi- essence of stokvels. forced saving mechanism next few weeks for an in-depth
ence backed by the various re- Call it mogodishano, umgalelo, Mamapudi Nkgadima, through microlending the funds view of this phenomenon.
search projects undertaken in umrholiswano, syndicate, gooi, Managing Director of African within/or outside membership The African Response survey
2011, 2014 and recently in 2017, gooi, savings club, investment Response research agency for mutual group benefit. was based on a nationally repre-
necessitated the need to run this club, holiday club, family club, The value of stokvel is not only sentative, randomly selected
publication and share the value etc., what is key is the common financial but is also about build- sample of 2,500 respondents
of the powerful economy of goal of pooling resources togeth- limited to membership but are ing and nurturing relationships aged 16 years and older. Thirty
stokvels. er for the mutual benefits. shared through direct or indirect among friends, families, col- percent of the sample covered
The dynamics of stokvels; the Today stokvels have become relations to a family member leagues and other types of small towns, rural and deep ru-
powerful value of stokvels; their synonymous with traditional who is an active stokvel member. groups that get together for a ral areas whereas the balance
evolution in terms of how they saving mechanisms where a This is truly the principle of common goal be it church covered large towns, cities and
are run, operate, what new types group of people (who trust each Ubuntu in action: “You are be- groups, investment etc. metropolitan regions. This de-
are emerging, what investment other and have a common goal) cause we are” thus satisfying one There is always an opportunity sign is in line with the national
platforms are they using and pool their limited resources to of the primary drivers for joining to “hit two birds with one stone” urbanisation rate of 64% (Statis-
why; what keeps members unit- achieve bigger and better for stokvel so to speak by initiating solu- tics South Africa).
ed and what can be learnt from themselves, their families and The stokvel phenomenon con- tions/products/services that Be part of the African Re-
this; what challenges they deal their communities at large. The tinues to draw interest from indi- have dual benefit. sponse StokveLink community
with and what makes them rele- benefits from stokvels are not viduals and businesses across July is a savings month. We of- by dialling *120*553*18#
July 27 - 29 2018
III
Age-old saving system now big
player in mainstream banking
Simangele Shabalala, a young profesional who credits stokvels
with turning her financial life around
Stokvels are away from villages to urban ar-
eas, from keeping cash inside
be traditionally accepted, but be-
cause of the trust system, they
becoming a mattresses to keeping it in bank
accounts. They have become an
are able to facilitate the transac-
tion with stokvel members.
popular informal way of facilitating pay-
ments among members, a trend
As the primary breadwinner
in her family, Simangele Shabal-
investment choice which dates back to the 19th cen- ala, a 24-year-old professional, is
tury. using stokvels as a long-term in-
Ntombi Tisani, head of mar- vestment plan.
By Palesa Vuyolwethu Tshandu keting at Old Mutual Personal “It’s like a savings plan with
Finance, said: “while they con- your family and people who un-
Stokvels, an old community sav- tinue to play a key role in our derstand you and your financial
ing system that was historically communities; the arrangement struggles,” Shabalala said.
the reserve of rural and township of stokvels is increasingly reflec- She is a member of three
communities, has grown in pop- tive of changing social dynamics. stokvels and is often the
ularity to become the economic These include expanded defini- youngest in her group. She has
vehicle of South Africa’s town- tions of stokvels as hubs for so- debunked stereotypes that these
ship communities. cialising, helping to reduce costs, groups are reserved for older
They have become a huge realising shared goals – like sav- people.
commercial vehicle that is cred- ings for holiday travel, building “At the beginning of the year
ited with most double storey commitment and spreading fi- we meet to discuss our needs for
mansions that are mushrooming nancial education. the year and we each e explain to
in most of South Africa’s town- “Stokvels have progressed in the members how much we are
ships. The proceeds are often the way their role is perceived going to need,” she said.
used for purchases of cars, hous- and in the way they operate. The Shabalala said the main rea-
es and to even send children to fact that stokvels are evolving in- son for participating in stokvels
university. to a modern savings solution is was because “it is affordable and
Stokvels are described as invi- positive news. But it’s imperative you don’t get penalised for miss-
tation-only clubs of 12 or more that members do their home- ing a debit order, like banks do”.
people serving as rotating credit work and ensure their stokvel so- She has been using stokvels
unions or saving scheme in lution is efficiently structured for the past three years and de-
South Africa, where members and geared for growth.” scribes it as much more effective
contribute fixed sums of money The 2017 Old Mutual Savings than a traditional bank.
to a central fund on a weekly, & Investment Monitor found “Too often we sign too many
fortnightly or monthly basis. that more than a quarter of black legally binding documents. If
According to the National metropolitan working house- you lose your job there are all
Stokvel Association (Nasasa), holds prefer to save using a sorts of penalities.”
English settlers in the Eastern stokvel or savings club. There’s According to the World Eco-
Cape held auctions which were also been an 11% increase in nomic Forum, more than 70% of
known as “stock fairs”, a word stokvel membership among adults in South Africa have
which later evolved into stokvels, high-income earners (those transaction accounts, yet only
which was used to describe earning R40,000 or more), from 24% make more than three
pooled resources with which to 46% in 2009 to 57% in 2017. This monthly transactions such as
trade livestock. Today, stokvels challenges the perception that withdrawals, deposits or card
apply similar principles, as stokvels are still predominantly a swipes, with more than 60% of all
members pool in financial re- lower-income phenomenon. purchases being paid in cash.
sources for the benefit of the “The increasing buying power Stokvels have also been the
group. and growing stokvel footprint Ntombi Tisani, head of marketing at Old Mutual Personal saving grace for those who are no
An estimated 40% of South empowers members to demand Finance longer recognised by the credit
African households belong to more from service providers, in- system, making it difficult for
stokvel group saving schemes. cluding financial education, ad- Tisani added. porates to look at inclusionary them to access certain products.
Nasasa says more than 11.4-mil- vice and platforms that will grow But most of these groups have mechanisms for lower-income But for young professionals
lion people in South Africa be- the stokvel and enrich the overall organised themselves based on workers. Nasasa has agreements such as Shabalala, “that’s how
long to a stokvel, collectively sav- experience. These add-ons trust, which is why organisations with service providers who are our money earns interest. I’m al-
ing about R49bn a year. should contribute to members’ such as Nasasa have created able to offer services for mem- ways preaching to young people
Stokvels have been moving ultimate goals for the stokvel,” working relationships with cor- bers of stokvels who would not to join stokvels”.
July 27 - 29 2018
IV
Banks are also joining in on the increasingly lucrative stokvel sector. P H O T O : MARIANNE PRETORIUS.
Finance
institutions
cashing in on
stokvels
Offerings of enue. But there was no intention
to introduce a new product.
tailored products “We continue to see significant
growth of new accounts and de-
help banks share posit balances of over 11% on a
year-on-year basis and ahead of
the spoils household savings industry
growth,” Ramolahlehi said.
By Asha Speckman South Africa’s household sav- stokvels gain access to stock- charges R5 monthly for access Bank banks the highest share of
ings to disposable income rate is broking events. to Allan Gray’s money market stokvels by percentage with 29%,
At a time when the financial sec- 0.2% per month, according to the “We do, however, see clubs that fund and Satrix 40 – an index followed by Nedbank with 19%,
tor battles to raise South Africa’s Reserve Bank’s December 2017 take up the fixed deposit and no- tracking performance of the top FNB with 13%, and Absa with
weak household savings rate Quarterly Bulletin. tice select products as well.” 40 companies listed on the JSE. 11%. The percentage of those
through formal commercial Ramolahlehi said the stokvel FNB is in a closed period until But like a stokvel, member- stokvel members who did not
products, some banks are reap- account has been a conduit for mid-September and could not ship is by invitation only from a have personal bank accounts
ing rewards through extending Standard Bank to sell other comment on the growth of its user you may know and who is rose from 10% in 2011 to 18% last
tailored products to stokvel products in its savings portfolio, products. already connected to the appli- year, underscoring the impor-
groups. resulting in a growth of interest Himal Parbhoo, CEO of FNB cation. tance of stokvels as an alterna-
The popularity of joining in products such as its fixed de- retail cash investments, said A study conducted by African tive savings vehicle.
stokvels as a means to save at posits accounts, notice deposits, FNB’s stokvel and “traditional” Response, a research and strate- On the other hand, borrowing
cheaper rates has been an attrac- Money Market Call and Mar- savings products were geared to- gic insights consultancy, found through savings clubs is fairly
tive option for decades. ketLink. wards encouraging clients to that last year, of the funds in- small globally.
Of South Africa’s five big “The end in mind is that cus- save for their goals. The bank’s vested from stokvel contribu- A report commissioned by the
banks, Standard Bank’s Society tomers want to optimise and products cover burial, groceries tions, the bulk was mainly de- World Bank indicates that “bor-
Scheme account, a product grow their savings by benefiting and holiday savings goals. posited into notice deposit ac- rowing semi-formally from a
geared towards stokvels, has be- from double interest rates paid Capitec Bank said it did not counts, followed by savings savings club such as a rotary sav-
come a “cash cow” for the bank, from society schemes and invest- cater specifically for stokvel bonds. Only 5% of contributions ings and credit association was
making it one of the products ments accounts,” he said. groups. were invested in exchange trad- reported by 3% of adults in devel-
that are considered to have Absa’s Club Account requires But new savings options are ed funds, with even fewer con- oping economies”.
reached growth maturity. a R50 opening deposit compared entering the financial services tributions going towards divi- However, globally the share of
Malefetsane Michael Ramo- to the R500 opening deposit that market. dend paying stocks, endowment adults reporting formal borrow-
lahlehi, who is manager for the Standard Bank’s stokvel product In July this year Franc, a new policies, property and unit ing, including through the use of
savings products portfolio, retail requires. application for smartphones, hit trusts. a credit card, remained flat be-
& business banking at Standard A spokesperson for the bank the market. It provides access to There are 440,462 stokvels tween 2014 and 2017 at 23%.
Bank Group, said the product – said in an emailed response that the money market and ex- and 11.8-million members coun- The research was published in
launched several years ago – was the product range was wide and change-traded funds. Launched trywide who collectively gener- “The Global Findex Database
“considered to be a cash cow” as included a travel club account, by Thomas Brennan‚ the former ated R54 bn in contributions. 2017 – Measuring Financial In-
it had fulfilled its expected busi- grocery club account and invest- head of digital innovation at Dis- The African Response re- clusion and the Fintech Revolu-
ness imperatives to generate rev- ment club through which covery Health, the service search shows that Standard tion” recently.
July 27 - 29 2018
VI
Carving their own destiny
Most women-run ished following the amendment.
But for Ubisi another plan had
empires started formed – an investment decision
that would unlock other oppor-
with stokvels tunities in later years.
Together with a group of wom-
By Asha Speckman en, Ubisi, from Vaal, south of Jo-
hannesburg, formed a stokvel in
It was 1995 and Princess Ubisi 1995 and called themselves La-
was stuck with bills to pay, three dy’s Nite. Its members were
daughters to raise and pressure united by a common interest: all
to supplement her income. desired to become successful
This was the year in which business people.
South Africa hosted and won the At first they set aside R5000
Rugby World Cup and govern- weekly, meeting every Thursday.
ment abolished the financial But they soon raised the target to
rand, which was traded at a dis- R11,000 as they worked harder
counted parallel currency to the to make their goals a reality.
commercial rand. All have since launched busi-
But interest rates were high at nesses with their proceeds from
double-digit figures, making bor- the stokvel.
rowing an expensive option. Ubisi, now a budding en-
Three years earlier the govern- trepreneur, launched a bar in
ment had amended a section of Boipatong township near Van-
the Usury Act that capped the derbiljpark. This was the same
pricing on short-term loans, township which was the scene of to Ubisi’s next big break.
which had locked many South a bloody and brutal politically- “Because of a clean credit record I got
Africans out of access to short- motivated massacre in June a loan from a bank for an Engen garage
term credit. The industry flour- 1992. It was a small bar but it led franchise,” she said.
Her fellow stokvel members were on
the rise too and their businesses also be-
gan to flourish. But while at first the
group had 12 members, some dropped
CHOOSE FOR
out along the journey. “We are now nine
members,” she said.
Research conducted recently by
African Response, a research and
MOUTH-WATERING AROMA strategic insights consultancy, indicates
that within the stokvel purse the major-
ity of contributions is dedicated towards
functional needs. Money towards ex-
pansion of business interests ranked
lower in priority over and above grocery
and clothing purchases.
According to the study there are cur-
rently 440,462 stokvels in operation
with 11.8m stokvel members country-
wide. Gauteng has the largest concen-
tration of stokvels. Collectively stokvels
collected R54bn in contributions last
year.
The stokvel concept exists around the
globe as a category known as Rotary
Savings and Credit Associations.
In South Africa it was thanks to the Princess Ubisi at the launch of her
exclusionary practices under the Engen garage.
apartheid regime that saw stokvels rise
in popularity as almost no commercial
activities were permitted in black town- Moliea said.
ships. This led to almost a non-existent He found that participant groups used
banking footprint in blacks-only resi- the money for building houses and edu-
dential areas and in homelands. cating their children, especially at ter-
A research project into stokvels as an tiary institutions. Women have typically
alternative sustainable and self-suffi- also tended to prefer forming a group
cient form of microfinance found that with other women over and above men.
there was a gap in the servicing of fi- “They have become known as such a
nancial needs in underserviced areas strong intermediary in the informal fi-
such as former homelands and town- nancial sector that the South African
ships. This had led to the creation of in- Reserve Bank included them in the reg-
formal microfinance institutions. ulatory framework of financial institu-
The research was conducted by tions in 1994,” Moliea said.
Hulisani Moliea in a thesis titled Yet, following the demise of apartheid
“Stokvels as alternative microfinance and the inclusion of black people in the
institutions: Conversation with women banking system, stokvels continued to
from Venda”. It was submitted to the gain popularity.
Gordon Institute of Business Science in The FinScope South Africa study
2007. published by the Finmark Trust in 2017
“Stokvels are successful because found that about 77% of the population
members appreciate the forced savings was now banked. However, an increas-
aspect, and were also preferred by peo- ing number of South Africans still con-
ple who did not have access to funds to tinue to use informal banking products
improve their standard of living,” to meet their financial needs and goals.
July 27 - 29 2018
VII
Money-making
machine for the poor
Money stokvels The woman, who didn’t want
to be named for fear that her
give banks a run stokvel may be targeted for rob-
beries, said they rotate their
for their money meetings at each other’s houses
every month for safety.
By PENELOPE MASHEGO Once there, the hosting mem-
ber provides a meal for them,
In a country where financial in- which they pay an extra R100
clusion continues to be a chal- for. She said the R100 is a non-
lenge, stokvels are providing negotiable as “food is expensive”
South Africans with a platform and no one should have to worry
to save money for their needs about spending a lot of money on Bulk groceries that are the proceeds from monthly stokvel
and escape poverty. food while they are trying to contributions, often shared by members in December.
For decades, black communi- raise money.
ties have been using stokvels to The monthly contributions are
save money for financial, social then handed out around the idea of making use of banking their money for the round.
and entertainment needs, this group and counted by the last services for their stokvel. “We are still doing well, most
practice continues to be popular. Jan Wegelin, head of research person in the circle, who then “We avoid the bank, imagine people who join stokvels [like
The National Stokvel Associa- at African Response. gives it to the person whose turn the fees for 10 people depositing ours] are people who have chil-
tion of South Africa (Nasasa), de- it is to receive the lump sum money into someone’s account,” dren in university or building
scribes a stokvel as a type of ro- cash. There is no chairman, trea- she said. houses. People have their own vi-
tating savings and credit associa- bership, grocery stokvels are surer or secretary in the group The woman said that their sys- sions and plans and there has
tion, credit union or communal quite common, with a member- since all the cash is handed out, tem is based on trust and they never been anyone who didn’t
group. Stokvels are made up of a ship range of five to 60 people. counted and received on the spot. have never had a member fail to understand the importance of
group of people who agree to The members contribute an They have not considered the pay or run off after they received this,” she said.
contribute a fixed amount of agreed to amount of money dur-
money weekly, fortnightly or ing the year, which can be kept
monthly. in a bank account, at a whole-
Nasasa estimates that there saler, or with the treasurer until
are 800,000 active stokvel December, when they go and
groups in South Africa, with buy what they need.
over 11-million members, saving People join a money stokvel,
R49bn. called mogodisano in the town-
Communities often start or ships, to exchange funds for dif-
join stokvels based on their ferent purposes.
needs, recruiting members by “A money stokvel is where
word of mouth or through invita- people exchange funds between
tions from family and friends the members for many different
who are already members. purposes,” said Wegelin.
The biggest stokvels are gro- The collection and circulation
cery, savings and money of the money takes place within
stokvels, as well as burial soci- the group and away from banks,
eties. As of 2017, according to making it the least banked type,
market research company where only 22% of stokvels keep
African Response, burial soci- their money in a bank account.
eties have the most members at Another characteristic of this
39%, grocery stokvels have the stokvel is that it can also operate
second largest membership at as a microlender, providing
29%, while money stokvels take members loans for repayment
up 27% of the membership and with interest. Again, this leaves
savings stokvels take up 23% with banks out of the picture as there
14% going to other types of is no expectation for collateral or
stokvels, ranging from invest- surety that banks require.
ment to holidays and property. A saving stokvel on the other
Burial societies give a lump hand is similar to a money stokv-
sum of money to their members el, in that it provides members
for a funeral. The number of with instant access to funds. The
burial societies has decreased only difference is that it may not
from 65% membership in 2014 to necessarily rotate every month.
39% last year. This is due to com- “Everyone on a monthly basis
panies such as Vodacom and [contributes] R100 or R200, and
Edgars now providing funeral the stokvel just keeps that money
covers, which head of research at for whenever someone might
African Response, Jan Wegelin, need something but generally
said costs about R40 or R90 a the purpose of it is to put money
month. aside whatever the reasons are,”
“Some people have opted then said Wegelin.
to do it on their own, rather than The saving stokvel has the
being part of a burial society. But most money banked, and 62% of
in terms of the size of the stokvel savings stokvels have a stokvel
industry, burial still has the bank account.
[highest] number of members. For a woman from Katlehong,
“The contributions of burial east of Johannesburg, trust has
stokvels are quite small, it’s kept her money stokvel going for
about R100, R150 or R90, where- the past 10 years. She said that
as grocery, savings and money her stokvel started off with a
[stokvels] generally tend to be R1,000 contribution and now the
more per month,” Wegelin said. group contribute R2,000 each
With the second-largest mem- per month.
July 27 - 29 2018
VIII
Pick n Pay, Absa
enter the grocery
stokvel market
Retailers join in on
By Merrick Parker
Stokvels continue to be big busi-
ness for wholesalers and cash &
carry businesses but grocery re-
the shopping spree
tailers are starting to cash in on to build the capacity to make meet the stokvel season demand.
the market segment. purchases at that level, and from He said the country’s top outlets
Mizi Mtshali, CEO of the Na- similar outlets. That relationship for stokvels are Makro Alberton
tional Stokvel Association of is built by forming a grocery and Makro Crown Mines, who
South Africa (Nasasa), said stokvel with family and friends each collect roughly R20m a
while it is not clear when the re- with a common goal. year from such groups.
lationship between stokvels and Mtshali said stokvels started to Stokvels have developed a sim-
retailers began, over the past 20 follow local traders to their pre- ple tool, which is their stokvel
years, the relationship has be- ferred outlets, the wholesalers grocery list, which contains
come more visible. and cash & carry outlets. roughly 20 product categories
Mtshali said it is important to “At first, these outlets under- they have agreed to buy.
understand the types of outlets stood very little about these Mtshali said the group deliber-
chosen by stokvels, and the rea- groups that would insist on deliv- ates and votes as to which brands
son for this choice. “If you had to ering monthly instalments to- to buy within these categories. Of
look at your local spaza shop – wards a bulk purchase in De- these categories, some of the top
the owner is able to buy goods in cember. Soon they understood priority items are maize meal,
bulk, which works out less ex- that these were stokvel groups, rice, pilchards, sugar, cake flour,
pensive. This means that the and that the behaviour was hot beverages & creamers, per-
shop is able to sell these goods adopted nationwide,” said Mt- Mizi Mtshali, CEO of the National Stokvel Association of SA. sonal care items as well as wash-
and make margins. This spaza shali. ing powder.
shop owner buys these goods at Today, arguably all grocery Leading outlets in this space
the nearest wholesaler,” said Mt- wholesalers and cash & carry monthly deposits from each The outlet is able to identify include the Makro and Big Save
shali. Seeing an opportunity to outlets have built systems group. The funds are locked and certain product categories as be- chains, as well as independent
access the same bulk saving as around stokvels. This system accessed through product at the ing “stokvel lines”, and are able cash & carry outlets such as Dev-
the trader, stokvels have sought starts with taking and recording end of the year. to order the volumes that will land, Kit Kat, Tradeport, Front-
July 27 - 29 2018
IX
line, Advance, Sunshine and association with Absa.
Metro. The special savings facility of-
Phumzile Siboza, Massmart fers a competitive interest rate
brand and corporate communi- and encourages them to keep
cation executive said that for the their money safe until they need
past 20 years Massmart, mostly it.
through its wholesale stores “To support them further, we
such as Makro and Jumbo, has organise stokvel Indabas, and
specifically catered to the stokvel engage with groups to empower
market. She said that business them with knowledge on finance
remains robustly healthy and and other issues. We use the op-
continues to grow. portunity to listen to them care-
“Throughout the year we run fully about their needs so we can
focused programmes for the best respond,” he said.
stokvel customer in order to as- The group also has field cam-
sist them in getting the absolute paigns with Pick n Pay Stokvel
best value for their money,” said promoters, who visit communi-
Siboza. ties and offer assistance to stokv-
One such programme is Mass- el groups, he said.
mart’s special stokvel shopping Pick n Pay has around 15,500
days. Held before the festive sea- Stokvel members at the Pick n Pay Stokvel Community Indaba held in Soweto on June 9 2018. stokvel groups signed up to its
son starts, these events prompt stokvel loyalty card.
the proactive collection of orders Rapolai said they also offer
ahead of the peak purchasing Siboza added that prior to built for the individual con- But retailers are starting to see great specials to stokvels to at-
period, the securing of bulk dis- those mass shopping events, sumer, buying groceries for their the benefits of appealing to tract them as customers, espe-
counts, provision of assistance in stores offer special trading family. Wholesalers and cash & stokvels. cially during the festive season, a
making payments through di- hours, the picking and packing carry outlets, on the other hand, Papi Rapolai, general manager peak period for purchasing.
rect deposits rather than cash, of products and transportation of have designed their infrastruc- for wholesale and stokvel at Pick He said the group’s offering in-
and ensuring stock availability goods for those who need it. ture to accommodate bulk pur- n Pay, said the group developed a cludes things like free delivery to
on collection day, to name a few. Mtshali said in comparison to chases. formal programme to support stokvel groups for a R30,000
Siboza said shopping days also wholesalers and cash & carry This means for the purpose of stokvels in 2016. spend, and from October,
provide a platform for suppliers outlets, the commercial grocery the December bulk purchases, The programme offers special stokvels will be able to go to par-
to showcase their goods, and for retailers are less relevant to wholesalers and cash & carry benefits designed specifically for ticipating Pick n Pay stores and
different stokvels to socialise and stokvels, and this is simply due to outlets are the natural choice for stokvels, the latest of which is a receive quotations for their pur-
share saving and banking tips. infrastructure. The retailers are the stokvels’ bulk purchase. bespoke account for stokvels in chases.
July 27 - 29 2018
X
The good old
burial
society vs
big business
Businesses and contract or from you bank at a
similar price point that people
insurers enter the would pay into a burial society.
The first modern stokvel start-
market long held ed in 1932. It was called the Ban-
tu Burial Society, according to
by community the National Stokvel Association
of South Africa (Nasasa).
groups According to research con- Martha Makita Masegela from GaMabotja village outside Polokwane, listens to a presentation about
ducted last year by African Re- how to invest money during the Stokvel and Burial Societies Indaba at Merupa Casino, Polokwane.
sponse, a strategic research and P H OTO : S A N D I L E N D LOV U
By Merrick Parker insights agency, there are over
440,000 stokvels with contribu-
Burial societies, while still going tions of R54bn annually. members of stokvels. while the contributions of each tual published in July found that
strong as the largest type of When looking at burial society Jan Wegelin, head of research member are generally smaller that burial society membership
stokvel by membership, are fac- as a stokvels subsect, the re- at African Response, said that than in other stokvel types. The dropped from 32% of the house-
ing a challenge from commercial search found that there are 3.5m burial society stokvels tend to aim of a burial society is to pro- holds surveyed to 25% over the
offerings. Today, you can get a fu- burial society members and a feature larger memberships vide for the cost of a funeral upon past year. Since 2010 the number
neral plan with your cellphone large portion of the overall 11.8m than other types of stokvels the death of a member or their has almost halved from 49% of
dependant. households surveyed reporting
Like with other stokvels, con- they were part of a burial society.
tributions are generally made on The report also showed that fu-
a monthly basis. When a mem- neral policies taken out by
ber or one their dependants die households had increased over
the burial society provides a the same period.
lump sum to use for burial. Financial literacy played a
The majority of burial society part in this as well. As the pri-
members are female, with a 66% vate sector has made inroads in-
membership compared to 34% to a market that has been domi-
male. 40% of members are be- nated by the burial society,
tween the ages of 35 and 49 Wegelin said they had found that
while 32% are over 50. The aver- while the majority of people had
age monthly household income one plan, a high number had
is about R7,800. taken out more than one funeral
Mizi Mtshali, CEO of Nasasa, plan believing that one would
said burial societies have a num- not cover all the costs.
ber of systems that they adopt. But the sense of community
One burial society may be com- and a trust factor make a burial
pletely self-undrewritten, while society more attractive with
another may have a policy with members, according to Wegelin.
an insurer. What is most com- “You know who the other peo-
mon is a hybrid approach, where ple in the group are and they are
a portion of the funds go into the all elected … so stokvel groups
group’s account, and another are very well-structured and or-
portion paid to the insurer. ganised financial systems,” he
“The advantage of working said.
with an insurer is that the funds Mtshali said that in rural areas
will be available when needed. and townships, friendships and
The disadvantages are the often similar bonds are created among
lengthy claiming processes. If people who physically live in
the group has some reserves of close proximity to one another.
its own, it is able to provide the Once people move into cities,
benefit immediately, and collect most of these bonds are lost.
from the provider,” Mtshali said. However, new bonds are formed,
Wegelin said that number of which may not rely on proximi-
businesses offering funeral ty.
plans has increased over the past “Burial societies are formed
few years, which made policies around the need to help one an-
more readily available. He also other at times of bereavement.
noted that price pointed was also This help stretches far beyond
generally similar to the one a the contribution of funds, but
member would pay into a burial personal support during these
society. unfortunate times. This is
For that reason he said they known as “Izandla”, where
had seen a decline in the number members of your burial society
of burial societies even though make themselves available to
membership of existing societies help with processes such as
remains high. catering and logistics,” he said.
Despite having the largest As long as there is a commit-
membership among the stokvel ment among people to help each
Come together over a cup of Glen Tea! subsects, the 2018 Savings and other in this way, the concept of
Investment Monitor by Old Mu- the burial society will not die.
July 27 - 29 2018
XI
Members of a stokvel group in Johannesburg. P I C T U R E : WALDO SWIEGERS.
Built on principles of
on already,” she said.
Ngadima added that those ar-
guing for stokvels to be for-
malised need to look how these
groups have empowered people,
trust and loyalty
especially women.
The same vision of empower-
ment and long-term wealth is
what led Nicolas Manyike to es-
tablish the Property Stokvel In-
Though informal, vestment club.
“The black community is still
stokvels are very suffering the effects of apartheid
today … We created the club be-
formal operations cause we wanted to create
wealth,” said Manyike.
By PENELOPE MASHEGO He said that the focus of the
club was to purchase land and
Stokvels are common in many property, as well as franchise
townships and rural communi- businesses for the group.
ties in South Africa, despite their As such, for two years, member
informal nature; they are man- contribute R2,100 a month which
aged in an orderly structure will be used to purchase a fran-
based on trust. chise of the group’s choice follow-
Miziyonke Mtshali, CEO of the ing extensive research on which
National Stokvel Association of one will suit their needs. The
South Africa (Nasasa), which is a profits from the franchise will be
regulator of the country’s divided equally among the mem-
stokvels, said the groups enter in- bers.
to a savings contract, in the form The second phase of the club,
of a constitution, with people which is focused on property will
they know and trust. require 30 members to contribute
“Contrary to the popular nar- R15,000 a month. This will pro-
rative, stokvels conduct them- vide the club with access to
selves in an extremely formal R450,000 a month to purchase
manner, often with a military property for its members.
style of maintaining order. These very well-managed on their own. money, whenever stokvel mem- the office bearers are really just Manyike said the property
groups typically convene on a So the reference to [them being] bers meet they’ll have a book, helping to put structure and or- would be in the name of the
monthly basis where money is informal, is perhaps only in the where you put your name [and ganisation in place,” said stokvel, until the 30 month rota-
collected and recorded, and financial industry. It is really not details of your contribution]. The Nkgadima. tion is complete, to ensure that
where other group-related topics informal, haphazard and un- treasurer keeps all those, they She added that as a way of en- members do not renege on their
are discussed,” Mtshali said. structured,” said Jan Wegelin, will take that money either to the suring that the office bearers are promise.
As part of their structure, head of research at market re- bank or the undertaker or I kept in check, stokvels have as- Since the club does not do cash
members select office bearers search company African Re- think we see about 17% of trea- sistants for each of the three collections and contributions are
comprised of a chairperson, sec- sponse. surers who keep the money, so roles, particularly since there has deposited into the bank, it has a
retary and treasurer. The treasurer is perhaps the [some treasurers] have become been collusion between treasur- treasurer who works closely with
The chairperson is responsible most important person in the micro lenders on their own and ers and chairpersons in the past. the secretary and administrator.
for the constitution and member- group as they are responsible for those are some of the unspoken However, there have been calls “We are not a financial institu-
ship, while the secretary looks the stokvel’s finances. dynamics of how stokvels oper- for the funding groups to be for- tion, we don’t do any credit
after the admin in terms of African Response found that ate,” said African Response MD malised, with some saying they checks. On [terms of] our consti-
where members live, who may 62% of stokvels that have a trea- Mamapudi Nkgadima. should be paying tax. tution, if a member fails to con-
be moving and which members surer deposit their contributions She stressed that while some “What does formalisation tribute, [they] will be given a three
have passed away. in the bank via the treasurer. stokvels have the three office mean? Is there anything that is month period [to make their con-
“They [office bearers] have dif- However, sometimes the de- bearers, decision-making was broken? Is there anything that is tributions] and if they fail for
ferent roles and even though it is posits are not made into this is still the role of the group and not not serving the people? A lot of more than three months then the
an informal sector type of ar- not into a stokvel account, but the office bearers. people are saying they are avoid- member will be refunded 30%
rangement, the stokvels are very that of a treasurer. “The norm is that the group de- ing paying tax but they are sav- back and 70% will remain within
structured, very organised and “The treasurer looks after the cision-making is still very key, so ing on the money they paid tax the stokvel.July 27 - 29 2018
XII
Izandla Ziyagezana
ber. Bongi says that stokvel al-
lows them to use cash, rather
than interest-heavy credit, for
their purchases.
For the members of her
We’re in this together!
stokvels, it’s all about empower-
ment. “Since I started six years
ago, I have managed to build a
house, and furnish it with a dou-
ble-door fridge, bedroom suite,
and TV. I could never have
Makro stokvel
Makro’s stokvel member and
bought these without the savings
from the stokvel.”
success stories… single mother
Bongi Ngcobo
Ngcobo was raised by a single
parent who worked as a domes-
Bongi Ngcobo is a powerhouse. in front of the tic worker. There was never
This 46-year-old single mother house she money for anything but food and
supports her son, who currently built from the school uniforms. “I wanted more
lives with his grandmother. As a proceeds of for my child than what my dear
single parent, she has learnt to be her stokvel mother was able to provide – a
enterprising and self-reliant. membership. home, and a few nice luxuries.”
She makes a living by selling And she has been able to pro-
snacks at schools and in the local vide just that. But it’s also about
neighbourhood, but she’s had to the power of collaboration. “It is
carefully manage her money. important for friends to connect
That’s why she belongs to no less and build together.’ For Makro’s
than two stokvels, where she together, focused on helping lute essentials. But being the dy- But, she adds, each member stokvel managers, stories like
serves as treasurer for one. each other. There are 15 of us namo that she is, Ngcobo also gets their share come year-end. these motivate them to do more,
Ngcobo is the kind of person who meet every month and con- heads the Women in Success The idea is to enable them to buy helping their customers to fulfil
who makes things happen. But tribute about R300 per month, Savings Stokvel, which is fo- high-end items cash without their aspirations, and enabling
she couldn’t do it alone. She be- depending on our pockets,” she cused on helping this group of 10 having to pay them off with in- them to live better lives and save
lieves in the power of the collec- says. This stokvel exists solely to friends get ahead and succeed in terest. In addition, these enter- money.
tive, and that’s why her one sort out school fees and uniforms life. “We each contribute R1,000 prising friends have created a Why don’t you share your
stokvel is aptly named Bam- in January, so that these hard- a month, and the money is rotat- holiday fund. They contribute stokvel story with us and give us
bisanani, or “collaboration”. working women can tick one ed between members, based on R100 a month, so that there’s al- your feedback? We’re in this to-
“It’s all about women coming more thing off their list of abso- our needs,” says Ngcobo. ways a special reward in Decem- gether! Dial *120*553*10#
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XIV
A lifeline for those
As for the savings stokvel,
which she joined in 2016 –
where her and 10 members were
initially contributing R1500
monthly each – and currently
seeking a big break
contribute R4000 monthly each
– Ncamile says she is thinking of
branching out with a few friends
to start another savings stokvel.
She plans to do this with people
in her profession in order to aug-
Stokvels have ment their existing stokvels and
avoid late monthly contribu-
evolved into tions.
She said the savings stokvel in-
vehicles used to cludes members who stay in
Pretoria and Cape Town, so
create wealth communication and account-
ability has lacked within the
group. “People don’t pay on
By Lutho Mtongana time,” she said.
Wegelin said that if someone
In an economy where getting a leaves a stokvel it will most likely
job is close to impossible given continue if the original purpose
the country’s high unemploy- for forming the stokvel still ex-
ment rate of 26.6%, it helps to ists. Changing or discontinuing
start your own business through a stokvel is a decision involving
money one generates from being all members but particularly the
involved in a stokvel. chairperson, secretary and trea-
For Nomonde Ncamile, a 37- surer as well as the constitution
year-old mother of three who it was based upon.
juggles a small business with her Which is why for Ncamile, in-
full-time job as a facilitator at the stead of exiting the group and
University of Cape Town, moving on with her life, she
stokvels have given her the pow- Stokvels have become a life saver for people such as those who are unemployed and looking to start plans to exit the stokvel that is no
er to manage her own finances their own businesses. P H O T O : E L I J A R M U S H I A N A longer working for her and start
better. one on the side with the few peo-
There are many types of ple who are still interested and
stokvels, the most common be- her to finally pay off that debt African Response in the catego- Of the three stokvels Ncamile willing to commit to the stokvel.
ing burial stokvels, followed by early this year. ry of savings stokvels, last year, is in, the groceries stokvel was Another option, said Wegelin,
grocery, money and savings Ncamile runs a fashion stock there were about 2m members. less helpful, she said. She said it is that a stokvel may change
stokvels. business where she buys brand Gauteng had the highest contri- used to be useful but the more from, for instance, a money
This is according to research clothing, shoes and bags at facto- bution of 47% and Western Cape, she is able to generate her own stokvel to a savings stokvel if it
by African Response, a research ry stores in Cape Town where where Ncamile resides had only goods the more she finds it needs to be, and the original pur-
firm that looks at stokvels as an she lives and ships them to sell in 4% of savings stokvels members wasteful “to have 12 bottles of pose no longer makes sense. The
informal economic phe- Lady Frere, Eastern Cape contributing. mayonnaise”. purpose of a savings stokvel is
nomenon. through the help of her mother Jan Wegelin of African Re- She is considering getting out usually long-term and with that
Money stokvels used for er- who resides there. sponse saidthose who start a of that stokvel. She contributes the commitments and intentions
rands or emergencies. |Stokvel Ncamile is a member of three business using their stokvel R500 every month and there are are different. Saving to buy a car,
savings are never for errands but stokvels: a savings stokvel, a gro- funds tend to retain membership 10 members in the group. She extend an existing house, or buy
rather for money to enable short- cery stokvel and a burial stokvel. of the stokvel to buffer business took over the groceries stokvel in new furniture requires a differ-
term needs such as buying furni- The savings stokvel is the one fluctuations and to potentially 2016 from her mother, when she ent strategy from saving for er-
ture. Savings stokvels tend to be that has been more fruitful for extend business practices using had to move to Lady Frere from rands or emergencies.
used for longer-term invest- her, as it helped her start the stokvel funds. Cape Town. For Ncamile, her long-term
ments, such as saving to pur- fashion stock small business for “The original purpose for start- Ncamile said that the burial plan with the current savings
chase a car. extra cash. ing a stokvel is when a group of stokvel was with family mem- stokvel she is involved with is to
It was in 2010 when Ncamile As the business has its ups and people trust one another and bers only. She said there are 12 save enough money to move out
had a debt burden of R100,000, downs, Ncamile credits the sav- share a common purpose, so members of her family con- of her grandmother’s house and
which she accumulated at the ings stokvel to keep it running. even if a member decides to start tributing R150 monthly each and find her own place to rent. She
time she was working at her pre- “It’s something to fall back on a business, this will not change she had not needed to use the stayed there with her two
vious job. However, joining a sav- and it’s helping,” Ncamile said. the initial motivation to join,” he burial stokvel funds since she youngest children while the old-
ings stokvel in 2016 has helped According to data compiled by said. joined in 2016. er one was at school.
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XV
Izandla Ziyagezana
We’re in this together!
Selvanathan Naidoo: Marketing
Manager – Makro Alberton Makro Riversands storefront in Fourways, Johannesburg
Bringing customers that you are helping them to realise
their dreams – to put their kids through
“Our mCard app and mRewards pro-
gramme are quite unique – they’re a huge
stokvel orders, and, come December, all the
items are waiting in store, neatly packed in
BIG savings and university, to build a home, or so that
they can take a holiday together,” he
boost for bulk buyers. And you’d be amazed
at how tech-savvy even our oldest gogos are.
pallets and ready for delivery or collection.
“If we don’t have an item in stock, we’ll
BETTER lives. says.
Naidoo believes in developing one-on-
They know how to use the app, and when
they see the substantial cash rewards in
try to get it by December, or we’ll recom-
mend an alternative”’ Naidoo says his
Selvan Naidoo is a people’s person. one relationships with his stokvel their mWallets, they really appreciate it.” In stokvel members can be anyone from top
From the moment you meet him, there’s clients, and in really listening to them. October each year, Naidoo’s team becomes businesswomen to elderly grannies raising
a real warmth about him. That’s why “It’s all about building trust, meeting a stokvel machine. They take in their 1,200 their grandchildren singlehandedly.”
he’s taken Makro Alberton to new their needs and going the extra mile.”
heights with the stokvel groups in his Recently, Naidoo’s team delivered a
area. Naidoo believes that you have to massive order to the South African bor-
leave the comfort of your desk and get to der. The stokvel member simply
know your customers’ needs. So, every couldn’t beat the bulk value she found at
second month, you’ll find him sipping Makro. But, more importantly, she trust-
tea with a resourceful group of stokvel ed Naidoo to get her just what she need-
stalwarts in their living rooms. ed. “When you understand your role in
“When you take the time to chat to the stokvel – when you see yourself as
these amazing women – many of them empowering these incredible women –
single moms – you are so humbled by there is really little that can dampen
their stories, and what they have your enthusiasm,” he says.
achieved through stokvels. It’s not just Naidoo believes that it’s this level of
the great savings and the bulk buy bene- trust, and the unique benefits that
fits they get from us. You get this sense Makro offers, that drives their success.
Guidelines for a successful
stokvel from Nasasa
The main reasons for joining a stitution. Decide on the number of
stokvel are the following: times and venues for meetings and
● Financial support agree on contributions.
● Access to credit
● Building up a credit record Number of members
● Establishing a social network Most stokvels limit their member-
● Community reputation ship to monthly or weekly cycles – 12
● Saving discipline members or 52 members for burial so-
● Funding a business: new or exist- cieties.
ing
Safety precautions
Types of stokvels It is a fact that, come the festive sea-
● Basic stokvel – money is ex- son, thieves are always ready to pounce
changed to meet a variety of needs; on unsuspecting consumers to swell
● Grocery stokvel – saving for bulk their own coffers. Stokvels are often
groceries; the easiest targets during December
● Burial societies – saving for fu- when members receive their dues for
neral expenses; and the money they saved during the year.
● Investment group – investing In this world of growing technology,
money to gain high returns on their stokvel members are encouraged to:
funds. ● Arrange for members to deposit
● Birthday cash directly into the club’s account in-
stead of keeping large cash at home;
How to form a stokvel ● Arrange for the payout to be elec-
Gather people that you know, trust tronically transferred into each club
and like. Ask each to invite friends. member’s personal account.
Drawing up rules For more information please con-
You can make up any rules and tact Nasasa on www.nasasa.co.za
even draw up your own stokvel con- or info@nasasa.co.zaYou can also read
