According to Andrew Lukhele, chairperson and founder of the National Stokvel Association of South Africa (Nasasa), the number of South Africans belonging to stokvels is expected to grow in 2023.
How do stokvels work?
“The term ‘stokvel’ is derived from the cattle auctions or stock fairs of English settlers in the Eastern Cape during the early nineteenth century,” explains Lukehele.
It is a financial scheme where clubs of individual members contribute money each month in a lump sum. This lump sum can be given to one member of the club weekly, every fortnight, monthly, or even annually. Members can also receive a lump sum of their monthly contributions at the end of each year.
“Stokvels, or saving clubs, have been around for generations, and create mini communities in which like-minded people can meet regularly to socialise and support each other in keeping up with monthly contributions,” according to Sisandile Cikido, head of retail investments at Nedbank.
Different types of stokvels are offered, including rotational stokvel clubs and grocery stokvels. It is a phenomenon that exists worldwide, according to the Nasasa website. Similar financial systems include tandas in South America, kameti in Pakistan and tanomoshiko in Japan.
Financial pressures
Following the financial pressures of the pandemic, many South Africans turned to stokvels as a means to save money. According to the Old Mutual Savings and Investment Monitor in 2022, informal savings and stokvels “remain popular and continue to attract significant inflows”.