Our banks turning a blind eye on Stokvels

By Mzukona Mantshontsho

Stokvels are a major source of investment for many South Africans. The tragedy is that South African banks treat all stokvels uniformly and do not closely look at the constitutions to see how they can help address each stokvel’s needs.

“Stokvel, Social-club, Society, Umgalelo, Lekgotla or Masingcwabane: Whatever name you call it, they work and have done so for many generations,” said CEO at BSK Marketing & Associates Busi Skenjana. She was sharing her journey, insights, and uncovering the hidden jewel in stokvels.

The idea of stokvels is often associated with the “black community”, so her journey was a way of breaking the stereotypes, finding-out more about stokvels in Soweto, Johannesburg, where she lives. Her definition of stokvels being a group of people coming together to collectively share their aspirations, basic things in life, facing their personal and family challenges and fulfilling their dreams.

Stokvels have over the years become an integral part of every South African black woman’s (and a few men) life support – be it financial, emotional, spiritual or just socialising.

It was very interesting that the recent Old Mutual Savings and Investment Monitor revealed that stokvels had 11.4 million members and the current estimated value of the stokvel market in South Africa was at R45.1 billion per annum as compared to approximately R38.6 billion in 2011. It was very disappointing to learn from the same investment monitor that South Africa’s savings rate is just under 16% of GDP, compared to 34% in India and about 20% in Russia our BRICS friends.

Skenjana insists that stokvels have built many homes, they have educated the black nation, they feed families, and they heal broken hearts through their sisterhood support system.

Raymond Berelowitz, Director of Marketing at Old Mutual, said more South Africans are struggling with debt and are cutting back on their savings, including what parents are putting aside to educate their children, with possibly devastating consequences for generations to come.

Skenjana further said that although South Africans were notorious for the culture of not saving, it is only stokvels that have managed to successfully instill a compulsory saving culture in many South Africans through their savings clubs.

Berelowitz said the most popular savings vehicles for those who do not save are funeral policies, at 65%, and pension or provident funds, at 56%. Stokvels are used by 65% black households.

“We had a society group that we started with a few close friends and saved R25, 000 which we invested in an Offshore Unit Trust with the hope of making loads of money. A year later we had R24, 000 in the account and we were simply told the unit trust we had invested in had not done well. We split the money and went our separate ways. If the financial advisor at the bank had taken the time to explain, we would have known what we were getting ourselves into,” said Skenjana.

Skenjana goes on to say that stokvels are not static but evolve almost on weekly or monthly basis and they are formed for different reasons. Stokvel life-spans vary, there are stokvels that last a year and others have been around for more than 15 years.

“I remember another group we had with 10 friends to invest in buying property, from our personal savings we bought a chalet at Kruger Park Lodge in 1998 and I am happy to say that the lodge still exists. Not to sound negative towards the banks, none of the banks in the country have a database of all these stokvels so that they can cater for their individual needs.

“Banks have the constitutions and the money of these stokvels which are a requirement when opening a society scheme account. The concern is that these banks as I see it, do not take the time to find out why these groups are being formed so that they can segment them accordingly and offer targeted needs.

“The money sits in the bank account for however long and nobody cares to make suggestions of how the funds could be used to add more value to the banks and the stokvels,” she added.

TransformSA spoke to Branch Manager at Nedbank Kacey Govender, who says as much as they have society scheme accounts; the focus is hardly ever given to understanding the consumers’ needs. “So yes, more could be done to segment the stokvels and address their individual needs”.

Skenjana further emphasises that stokvels are a very lucrative market segment for a broad range of products and services. These groups’ monthly savings per person vary from R100, 00-R5000, 00 – this money is used to buy basic commodities up to big ticket items.

Skenjana has been passionately working with a number of stokvels around the country since 1998. She also has a book entitled: “Stokvel Guide”. She was Chairperson of Soweto Businesswoman Association at the time of sharing her insights on stokvels.

Like any organization, stokvels come in different types and sizes. Some people belong to more than one stokvel because each stokvel serves a special purpose to the member. Hence South African banks should be looking at these numbers in stokvels and their various needs and tailor-make provisions for each stokvel.

Stokvels as we call them today, were once called small informal group savings schemes, have become a major force for investment – at an estimated R45.1 billion per annum and an astonishing 11.4million people. Banks should be looking at these numbers closely – 350,000 savings stokvels have a membership of 5.4 million savings about R25.4 billion annually, while there are 179,000 burial society stokvels with 4.7 million members who contribute R8.2 billion a year.

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