Edition: September / November 2015
Andile Mazwai* provides an insight into the historical
background and modern-day relevance of a multi-faceted
movement frequently misunderstood.
Acommon assumption in the business sector is
that stokvels are rotational savings and credit
associations (ROSCAs). This is true in that
stokvels do take the ROSCA form where members of
a group pool funds on a monthly basis and give the
pooled funds to a member on a rotational basis.
However, stokvels also include: savings and
investment clubs; burial societies; grocery clubs, and
other group formations that come together to pool
funds for a common purpose.
Stokvels exist throughout the world. They are not
a uniquely South African creation. In Bangladesh, for
instance, stokvel practices by women were used as the
building blocks for what is now the hugely successful
In SA, though, the history of stokvels is special.
It’s captured in the book Stokvels in South Africa by
Andrew Lukhele, current chairman of the National
Stokvel Association (NASASA). The term “stokvel”,
he points out, dates back to the early nineteenth
century when black farmers and
labourers attended “stock fairs”. Here
they exchanged ideas, displayed their entrepreneurial skills and gambled the
resources they had.
With the discovery of gold on the
Witwatersrand, black workers were
brought in as miners. They brought the “stokvel” with them and used the concept
in the formation of burial societies. Due
to deplorable working conditions, many
miners died. To address the need for transportation of deceased colleagues’ bodies to their home villages for dignified
burial, surviving miners pooled their
funds for the purpose.
Later, in the 1920s and 1930s, rural
women began moving to the cities. As
many black workers and miners lived below the poverty line, these women formed stokvels
to supplement their incomes. Stokvels were used as a
form of social security.
Mazwai . . . embedded culture
Then, in the 1980s, the apartheid government felt
threatened by stokvels’ activities. It was uncomfortable
that stokvel members were getting together – in
groups in undisclosed locations – to pool funds.
Wanting stokvels not to continue meeting for the collection and storage of public wealth without a bank
licence, it held them to be illegal.
Lukhele took up the cudgels on behalf of stokvels.
He approached the SA Reserve Bank to argue
that the black community could not in fact access
formal banking, as this was a privilege of the white
community, and that stokvels played a vital role in the black community to serve as a savings vehicle and
perform a social-security function.
SARB welcomed Lukhele’s submission. This led
the passing of an exemption from the Banks Act
for stokvels belonging to a recognised association.
NASASA was then formed. It is a self-regulatory
organisation authorised by SARB. In terms of the
Banks Act, a stokvel is required to be a member of
NASASA or a similar body approved in writing by the
Registrar of Banks.
At the 1994 advent of democracy, many believed
that stokvels would cease to exist as black communities would henceforth be able to access formal banking.
But between 1994 and the present, the number of
stokvels has actually grown. Why?
First, stokvels are more than merely a solution
to the inability to access formal banking. They are a
social activity. Many stokvel groups meet to pool funds
for a common purpose and to socialise as friends.
They have become part of the fabric of black and
increasingly South African society.
Second, more people in SA now have access to
incomes that they can contribute towards collective
saving for a purpose. Saving in a stokvel also provides
people with scale which they can use for more
favourable investment options. Stokvel savings can be
used, for example, to obtain bulk-buying discounts in
the purchase of groceries.
In SA, stokvels have many forms. Essentially, a
stokvel is any instance where a group of people who
know each other, come together to pool funds for a
common purpose. Many people aren’t even aware
that they’re participating in stokvels when they’re
called something else. For instance, there are some
clubs which pool funds to purchase goods in bulk at
Christmas; other clubs do the same for investment on
the JSE, and still others for members’ travel.
Some stokvels are short-term savings vehicles for
the purpose of consumption e.g. groceries. Others
are long-term savers e.g. for investing and for burial
societies which only utilise their funds in the instance
Today the stokvel market is worth an estimated
R49bn. This is a significant agglomeration of SA
short and long-term savings. As NASASA is the only
stokvel association approved by SARB, it is the largest
player in this industry with over 110 000 registered
stokvel groups. Noting in particular the short-term
savers for consumption of items such as groceries, they
are a lucrative segment for the private sector in the
space of fast-moving consumer goods.
For any queries, visit www.nasasa.co.za or call 087
702 4696. We’d be happy to help.