‘Tshitokofela’ is the Tshivenda word for Stokvel. I heard this term being thrown around a lot in my late childhood and teenage years. I witnessed my mother join different stokvels year after year, and sometimes she’d be part of more than two at a time. When the festive season began, as children we knew that there’d be so much groceries, new kitchen appliances, and we were going to get extra Christmas clothes because mommy’s stokvels had paid.
I did not pay attention to understanding what a stokvel is, or the dynamics of it – I just looked forward to the benefits. Today, I am all grown, earning money, and might consider joining a stokvel. But before that happens, I’m curious about what the stokvel model looks like in our generation, whether it’s still a viable option, navigating trust issues and if these have in any way, evolved.
Throughout the series, we looked at overcoming barriers to saving, how to handle lump sums and learnt money saving lessons from frugal living. This week, we delve into stokvels as a viable option for saving with Director of Kunene Makopo Risk Solutions, Dumi Makopo as well as Maryanne Sadiki, who is a founder of several stokvels.
Are Stokvels An Old Fashioned Way Of Saving?
“Stokvels have been in our communities for many decades, and with the advancement of banks and multiple investing options available at your fingertips, it is possible to think of stokvels as an old-fashioned way of saving,” says Makopo. He explains that stokvels will forever be viable and relevant as much as banks are. “What we should be addressing is the ‘how’. How to get in them to attract younger people in the new age of tech and the “new normal,” he adds.
Sadiki is a big supporter of the viability of stokvels in this day and age. She says she started her stokvels at work because it’s easier to interact with your colleagues and come up with ideas and explain why you want to start this stokvel that would also be beneficial for them. So, I started this stokvel that was not only beneficial for me but also for my colleagues.’’
Sadiki explained how her version of a modern stokvel worked. “I’d gather a group of six colleagues who were interested in saving. We had two cycles – where each member picked a month to receive the collected money, per cycle. The rules are clearly communicated from the on-set through a WhatsApp group. When it’s your month, each member deposits the agreed amount, directly into your bank account and sends proof of payment”.
Makopo highlights that saving in a group is much quicker than saving individually. ‘’Savings via groups will always be the quickest way to grow funds, but I do however believe that the savings culture should start with the individual. In my experience as a financial planner, I have come across individuals who used stokvel proceeds to pay off short term loans and this seems to counter the purpose of savings,’’ he indicates.
Navigating Trust Issues
The agreement amongst some traditional stokvel members is usually just verbal. I know from my mother’s stokvels that there were no contractual agreements – it was just an agreement amongst stokvel members who were obligated to honour that agreement, even though there was nothing legally binding. ‘’There was no contract signed because the thing with contracts is that it is binding. What I wanted to do is give members of my stokvel an option to leave whenever they felt like they could not be part of the stokvel anymore. We just also trusted one another as colleagues, we saw each other every day at work so there was absolute trust amongst us,’’ shares Sadiki.
On the other hand, Makopo argues that ‘’it is my selfish view that other financial instruments be introduced or made mandatory to the sustainability of stokvels. By financial instruments I mean the use of insurance and banking instruments. The money must be kept with the banks, and where possible, the products offered must be underwritten or insured.’’
Exploring Different Types of Stokvels
Makopo highlights that, ‘’the beauty of stokvels is that they can be adapted to fit any mould, from property, groceries to funding funerals. The fundamentals are similar to crowdfunding.’’
Some examples include;
· Property stokvels – This has sparked controversy particularly because of the dynamics of property, litigation processes, and the amount of money that is to be contributed. However, there are people who are part of this stokvel where they contribute every month in order to buy property.
· Grocery stokvels – This is where members of a stokvel contribute money every month, usually from January to December and collectively, that money is used for buying groceries.
· Funeral stokvels – This is where stokvel members contribute money in terms of their agreement, either once a year, or every month. The money is used for funeral arrangements should one of their members lose an immediate family member, or if a member dies.
· Travel stokvels – This is probably the most modern stokvel so far. It is usually amongst a group of friends who put together money for a travel destination.
Sadiki was happy to share that stokvels have been extremely helpful in her life. ‘’Stokvels are helpful for me personally, I’m still in a stokvel. What this means for me is, I get to budget for things that I need with the stokvel money saved. For example, I’m getting my share next month. I already drafted quite a few things that I want to get with that money, so it has been helpful in that regard,’’ she explains.
So, are you going to be launching your own stokvel soon? Are you part of one? Tell us how your experience has been in the comment section below.
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