• Mamapudi Nkgadima
African Response: MD
+27 11 709 7888
Soweto resident Gerald Pitsoe treated himself to a slightly damaged silver-grey luxury sedan. But soon it’s going to be as good as new – thanks to the money he gets from his stokvel membership.
“I don’t even have to ask the bank for a loan,” he says, of the funds needed to repair his pride and joy.
Pitsoe, a Metro Police officer from Protea suburb in Soweto, belongs to a masigolisane (rotational) stokvel.
In his stokvel there are more than 20 members who contribute weekly to a joint fund. Each Monday the collection of money is paid out to one member.
His is typical of stokvels around the country.
A stokvel is a group saving scheme, helping members with financial assistance when needed. They are set up by a group of friends or a community organisation to help save or invest, to provide for burials, to buy groceries in bulk, or even for special events like birthdays.
“I like this type of stokvel. It helps you. You can use other people’s money for your own projects. But you must remember – you have to return the favour,” said Pitsoe.
With rotational stokvels, members contribute a minimum of R1 000 ($120) a week into the pot. Amounts can go up to whatever people can afford.
South Africans are such huge fans of this savings scheme that, according to a survey by African Response, R44-billion (US$529-million) is currently invested in stokvel savings.
Survey tells the story of savings
The nationwide survey of over 2 000 stokvel members conducted by African Response, a market research company, found that there are 811 830 stokvels in the country, with 11.4-million members.
A recent All Media and Product Survey (AMPS) has found that 40% of South Africans belong to a stokvel. The AMPS was conducted by the South African Advertising Research Foundation, which uses surveys to determine target markets for products and services.
Mamapudi Nkgadima, MD of African Response, said: “African Response sought to quantify this market in terms of size and value as well as shed some light on attitudes and behaviours.”
She illustrated the numbers involved: “The population of a city made up of all South Africa’s stokvel members would be larger than any of our major metros, including Johannesburg, Pretoria, Cape Town and Durban.”
Gauteng leads the figures with 24%, followed by Limpopo with 20%, KwaZulu-Natal with 14% and the North West with 12%. These four provinces make up 70% of the stokvel market.
“Stokvel members are home owners, business owners, church members and people you work with,” says Nkgadima.
Findings of the survey
The survey broke down the types of stokvels.
The most popular are savings, burial, grocery, birthday and investment stokvels.
Savings stokvels are the most popular of all – 47% of people using stokvels belong to one.
This is followed by burial society stokvels with 41%; followed by grocery stokvels with 20%. Investment stokvels account for 5% of the members.
Savings stokvels mostly comprise 80% of people from urban areas; while birthday stokvels comprise younger members, with 66% between the ages of 16 and 34.
Groceries stokvels are made up of 86% women.
Higher income earners are attracted to investment stokvels.
Nkgadima said: “Stokvel membership very much depends on individual needs, which is why there are different types. Birthday stokvels fulfil social needs and saving stokvels are joined for security needs.”
The average contribution each month is R210 ($25), with burial societies having a lower than average contribution of about R115 ($14) per month.
Investment stokvels generate much higher contributions – from between R300 ($36) and R500 ($60).
The survey also found that the average number for stokvel members was 27.
Nkgadima said: “Burial societies tend to have much higher membership numbers while investment and birthday stokvels are closer, more intimate friendship groups.”
Stokvels attract more women than men, with 57% of women taking part, compared to only 43% of men.
This only differs in investment stokvels with the majority being men at 52% and women at 48%.
“Stokvels are no longer the domain of people in need of a collective pot for burials and groceries but provide a medium for which to learn about and jointly invest money with the aim of creating wealth and security for its members.”
Some 66% of stokvels make use of financial institutions, while 34% still do not. Nkgadima sees this as a great opportunity for financial services to manage stokvel finances.
People have different needs but their common factor is the need to save for a rainy day, while creating wealth and security for themselves.
Different stokvels for different people
People from different backgrounds, with differing needs, make use of the different stokvels.
John Lebetso, an informal trader from Diepkloof in Soweto, is a member of three savings stokvels. He meets with other traders every Monday, Wednesday and Thursday to pay in their contributions and talk money matters.
His stokvels have different minimum contributions, with the smallest being R300 ($36) and the highest being R1 000 ($120).
Although Lebetso’s stokvels are paid out annually, members do have the opportunity to draw their money every six months. Money can also be borrowed from the stokvel, at 20% interest.
“It helps a lot if you can’t save money on your own. It’s also encouraging as you’re around people who have more money than you but are entrenching a culture of saving in you,” said Lebetso.
Lebetso said there were more women in his stokvels than men, which seemed to indicate that women are better managers of money than men.
Esau Maota, a pensioner from Diepkloof in Soweto, has been a member of a burial society for more than 20 years. “This type of stokvel brings communities closer because it involves neighbours helping the families around them.
“It is also an affordable method to save for those enforceable problems.”
His burial society has monthly contributions of R250 ($30), with R200 ($24) going to a bank account and R50 ($6) going to the host of the gathering.
It pays out R7 000 ($841) for the burial of a member and R3 500 ($420) to their dependents.
Nkgadima said: “Stokvels continue to pervade all levels of society and they are here to stay.”