Why you should consider joining a stokvel
The COVID-19 pandemic and subsequent lockdown restrictions have negatively impacted many industries and resulted in over 600 000 jobs lost in the formal sector. It has also highlighted the importance of a community, and forming a stokvel may be the key to mitigating the financial impacts of the pandemic.
What is a stokvel?
A stokvel is a community-based savings club that has traditionally been popular in lower-income communities with groups that may not have had access to formal banking. Stokvels are an informal way of saving or investing money, and they are built on a foundation of trust between friends and community members. The group is typically formed by people who already know each other; however, sometimes the invitation gets extended to other like-minded individuals in the greater community.
There are different types of stokvels to accommodate different needs, such as burial funds, property investments, monthly groceries and annual pay-outs, typically in the festive season. While stokvels have primarily been popular with older women in particular, more millennials have begun to embrace this method of saving and investing.
Benefits of joining a stokvel
Each stokvel has its own constitution, which is collectively decided by its members. They get to decide how the money will be collected, who is in charge of collecting it and where it will be invested. Each member has an equal voice and is free to discuss any concerns or grievances they may have. There is complete transparency, accountability, and a culture of open communication between members.
By relying on the power of community and collective savings, you gain an additional stream of income while empowering yourself and others in your community. Depending on the size of your stokvel, you also have the opportunity to build bonds and grow your personal network.
The growing market
Recent data from the National Stokvel Association of South Africa (Nasasa) shows that there are over 810 000 active stokvels in South Africa, which collect an estimated R50 billion in savings annually from more than 11 million members.
There are existing affordable product offerings that are designed to cater to the specific needs of these savings clubs, such as the Standard Bank Society Scheme savings account, which offers stokvels and other savings clubs the opportunity to earn higher interest rates on their savings.
Additionally, depositing the contributions in a bank account provides an added layer of security as it is much safer than collecting money at meetings or keeping large amounts of money at a member’s house.
Proceed with caution
If you decide to join a stokvel group with people outside of your immediate circle or community, it is imperative that you do your research before committing. One way to do this is to check whether they are registered with Nasasa. If you suspect the group is fraudulent, you can report them to Nasasa on 010 007 2129 or at [email protected].