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The number of South Africans belonging to stokvels is expected to increase in 2023 amid market volatility, says chairperson and founder of the National Stokvel Association of South Africa (Nasasa) Andrew Lukhele.
With a membership of 11.4 million in 2022, the saving scheme has been valued at over R45 billion per annum and has become increasingly popular among South Africans. Some 810 000 stokvels were registered on the Nasasa database in 2022.
Speaking to News24, Lukhele says saving schemes like stokvels have been used historically when people have experienced tough economic climates, including during wars and pandemics.
What are stokvels?
"The term 'stokvel' is derived from the cattle auctions or stock fairs of English settlers in the Eastern Cape during the early nineteenth century," explains Lukhele.
It is a financial scheme where clubs of individual members contribute money each month in a lump sum. This lump sum can be given to one member of the club weekly, every fortnight, monthly, or even annually. Members can also receive a lump sum of their monthly contributions at the end of each year.
"Stokvels, or saving clubs, have been around for generations, and create mini communities in which like-minded people can meet regularly to socialise and support each other in keeping up with monthly contributions," according to Sisandile Cikido, head of retail investments at Nedbank.
Different types of stokvels are offered, including rotational 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 means 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 impacts the economy as a whole as well as families’ ability to ride out tough times. As we saw during the [Covid-19] lockdowns, stokvels helped many people to survive the catastrophic loss of income," says Cikodo. These financial pressures may continue to increase in 2023, as many South Africans are currently going through financial distress due to rising costs of living and interest rates.
Advantages of stokvels
As a financial scheme, stokvels have many advantages which are attractive to South Africans, according to Lukhele.
"It is trustworthy, approachable and sympathetic to the needs and difficulties of members and can help in emergency situations when money is needed quickly because they are flexible and accommodating," he says.
