STOKVELS are gaining ground in Mzansi and as the year begins, more are likely to be formed.
A stokvel is a savings or investment group – usually made up of like-minded people with similar goals – to which members regularly contribute an agreed amount.
The group then decides on how that money is shared, whether that is a monthly pay-out or invested and then shared at the end of the year.
Some stokvels even invest their money in long-term investment products such as property or a business venture.
Originally informal savings agreements, they have evolved and banks are now offering savings products specifically designed for stokvels.
According to research company African Response there are 8,6 million people belonging to more than 421 000 stokvels in Mzansi, with a collective value of R25 billion.
“While the term stokvel is uniquely South African, the group savings model is prevalent across Africa. Joining a stokvel is the easiest way to save up for something special or to pay for an unforeseen expense,” says Vusi Ndwandwe, managing executive for retail and business banking at Absa.
“Today they take different forms and have many names such as umgalelo, mogodisano, masingcwabisane, but the fundamental principles remain the same.”
Stokvels have also become an important means of fighting poverty and helping poor people stay out of debt, helping to reduce their reliance on loan sharks.
Not to be confused with pyramid schemes, which promise too good to be true returns on investments and use other investors contributions to pay these returns, stokvels offers transparency on how returns are generated thanks to clear record keeping.
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