“I don’t think financial institutions in South Africa realise the potential that is within stokvels. Everyone knows the 44 billion story, as I call it, but what are you doing with that money that is revolving within the hands of the stokvels,” BSK Marketing & Associates’ CEO Busi Skenjana told CNBC Africa on Monday.
Stokvels, also known as mohodisana, social clubs and kuholisana and makgotlas, have long been a safety net for millions of South Africans, providing financial security and social wellbeing.
“To me it’s a question of what are you doing to actually help stokvels to develop. What I’m passionate about is the development of stokvels so that that 44 billion actually translates into wealth to stokvels,” Skenjana added.
Stokvels in South Africa have an estimated total value of 44 billion rand. The country has approximately eight thousand stokvels and 11.4 million stokvel members. Skenjana indicated that they were seen as financial help mechanisms.
“It was primarily because of the migratory labour system in South Africa. People found themselves in the urban area and when the worst happens in terms of death, there was no insurance policies. Those that were living in mining hostels found a mechanism of collecting money together, so that they’d be able to support one another,” she said.
There are many different types of stokvels, which includes general savings, burial society, grocery society and investment stokvels.
Savings stokvels and burial societies are most popular, with membership estimated at 47 per cent.
Skenjana explained that majority of stokvels are not aware of other opportunities that they can take advantage of, and that most of the money collected ends up being consumed.
“A huge chunk of that 44 billion is money that is consumed by stokvels, not even invested. Even saving is not saving in a true sense. For example the grocery sector – 26 per cent of that 44 billion goes into grocery, and that is money that is consumed year in year out,” she said.
“The perception is that stokvels save, but in actual fact they do not save enough. They are not taking advantage of the power that they have within themselves.”