Saving money through Stokvels has been extremely popular in South Africa. People have widely adopted this traditional way of saving money for personal and business purposes. It is estimated that there are more than 8,20,000 Stokvels in South Africa with a total membership of 11.4 million people, handling over R44 billion per year.
A Stokvel is traditionally an informal financial group (IFG) formed between friends, colleagues, or like-minded people to save together. Every individual contributes an agreed amount once a month. Every member receives a lump sum amount in a rotating fashion during the lifecycle of a Stokvel. They are majorly used to save for groceries, birthdays, burials, and more.
Today, Stokvels are not only a way to save but also offer a reliable means for investments and other financial needs. They are filling the gaps in the financial sector that formal financial institutions are still trying to fill. Read to know how Stokvels are impacting people’s lives with all the benefits they tend to offer.
Fulfill basic financial needs
People in many African countries face challenges in accessing financial services due to high costs, long processes, and distance. Stokvels are considered as better alternatives when it comes to savings and loans, especially for unbanked people. Being a part of a Stokvel, people can easily meet their basic needs of buying groceries or even save for birthdays.
Quick and easy access to credit
Access to easy loans and credit facilities is one of the key benefits that Stokvels offer to the people. Compared to banks, people can avail loans as members at a low-interest rate and without going through long and mundane processes. Members don’t have to produce a lot of paperwork to get the loan which not only offers a more desirable experience but also saves time.
Stokvels have proven to promote savings and investment habits amongst women. According to a survey conducted by the Wakandi team, 57% of members of these Stokvels are female. They are viewed as instrumental for women members as they raise financial awareness and make them equal contributors to society.
Social support and trust
Stokvels play a key role in building and maintaining social support amongst the members. They tend to be more supportive of each other when any individual faces hardships such as adverse health or the death of a loved one. The COVID-19 pandemic boosted this trust between members as withdrawals have been less.
Stokvels have evolved significantly to meet the financial and social needs of modern South Africans. However, it is more important than ever to adopt digital systems and technologies to better serve society. With the right technology and continuous innovation, these Stokevels can continue to have a positive impact on the lives of millions of people.