When tavern owner Caroline Motloung needed money to buy stock for her business after the long lockdown period, she didn’t have to stress about applying for a bank loan.
Motloung, 70, from Sebokeng in Gauteng turned to her savings from the stokvel that she ran with three other people.
“Each member contributes R2500 on a monthly basis. We distribute the money in four, three-month cycles. We contribute a total of R10 000 a month, and on the third month the contribution adds up to R30 000.
In the third month, the first member on the list of beneficiaries receives their R30 000,” she said.
Motloung’s stokvel had been operating for more than six years, which means that members have so far received more than R180 000 during that period.
Motloung said that people join the stokvel for many reasons. “Some of them, like me, run small businesses and they depend on this money either to start their businesses or to buy stock and equipment,” she said.
She said the stokvel cash came in handy when the liquor ban was lifted. “People also join stokvels because borrowing money from banks is more costly,” she said.
Palesa Lengolo author of the book Stokvels: How They Can Make your Money Work for You said the schemes were a great way to raise funding for small businesses. She defined a stokvel as a group of people that collectively put their financial resources together for a common goal.
The group agree on terms in writing via a legal constitution, and deposit money in a Financial Sector Conduct Authority (FSCA)- registered financial service provider of which the account needs to be in the stokvel’s name.
“Collectively working together brings so many advantages such as bargaining and negotiation power and circulating money among black circles will assist not only with cash-flow but also much-needed growth,” Lengolo told Vutivi News.
“The power of a collective is a force because numbers don’t lie. They do need to be able to work with different people, and put tight agreements in place to eliminate unnecessary conflict,” she said.
“Stokvels are still the proudly South African alternative way to save, especially in black communities because of the spirit of assisting each other or working together known as Ubuntu,” Lengolo said.
According to Lengolo’s book, around R49 billion was saved annually by 11.4 million South Africans in 820 000 stokvels.