By: Tebogo Mokwena
Stokvels must increase their involvement in entrepreneurial activities for the sake of the township economy, according to National Stokvel Association of SA chairman Andrew Lukhele. He also recommended that stokvel that lent entrepreneurs money should register as credit lenders to avoid legal action for not providing credit in accordance with the law. Lukhele told Vutivi News that stokvels should be encouraged to invest in entrepreneurial activities in groups, and they should be given incentives in the form of grants if they were able to prove that their money was going to SMME development.
This was because stokvel money regularly funded businesses in townships such as shebeens and spaza shops. “Stokvels have been used to finance shebeeners, and the practice has been of great help to shebeeners who do not have access to formal financial institutions,” said Lukhele. “The South African authorities recognise the role of stokvels on developmental processes. The NCR (National Credit Regulator) notes that SMMEs in South Africa face serious obstacles in accessing finance for their activities.”
Lukhele also said that many considered stokvels reliable because they are trustworthy, approachable and sympathetic to the needs and difficulties of members. “According to Investec, the informal sector accounts for an estimated 17% of South Africa’s total employment,” he said. “These small businesses are often the backbone of the communities they function in and the lifeline to numerous communities. “Membership in stokvels makes capital available to people who would not qualify for loans from formal financial institutions,” he said.
On lending money to non-members, Lukhele warned that if a stokvel was not registered as a credit lender it may be found to contravene the National Credit Act and its regulations. He further pointed out that the NCR was clear that stokvels who lent money to non-members and charged credit were engaging in loan shark activities. However, Mbongiseni Sangweni, eKasi Entrepreneurs’ Head of Spaza Shops, which recently launched the Spaza Shop Stokvel, said that while he agreed with the NCR, he believed the regulator should thoroughly consult with stokvels on the legalities of lending money.
“By doing so they prevent gatekeeping activities because it has been difficult for small, black-owned entities that provide capital to do so under the watchful eye of commercial finance institutes who want a piece of the money generated and passed through stokvels,” he told Vutivi News.