Tried and tested stokvels popular with the young

STOKVELS have been the lifeblood of township and rural communities for decades but it’s not just the preserve of the old, a recent survey has shown.

Traditionally a group of people would contribute money to a saving’s pool for a specific period and each person would get a chance to draw the money, but these days it's not just about collecting lump sums as grocery and meat stokvels also exist.

This week data released by FNB showed that only 23% of their stokvel members were seniors, and 37% of their stokvels had two or more senior members in their groups.

It said this could indicate how tradition was being passed down to the younger generation as seniors and youth were now part of the same stokvels.

Dr Sheetal Bhoola a sociologist from the University of Zululand said given that inflation rates were exceptionally high, stokvels provided access to funding that people would not ordinarily have.

“There's no stringent regulations you have to pass, there’s no major bureaucracy. When you apply for a loan with a bank, look at the procedure, the process, the credit checks and all of that as well. In stokvels you're facilitating a credit rotational system and it's based on trust and people you've known, and the needs are all the same in terms of value.”

Bhoola said young professionals, especially single mothers struggled to make ends meet as all their money went towards rent, car insurance and personal living expenses and therefore stokvels made sense.

“Remember, its beginnings are pre-apartheid. It comes from impoverished backgrounds, from rural environments where there were no proper banking facilities and this is how women knew how to make ends meet. You know the groceries would come from a group of neighbours in a circle and everyone had a turn to make sure that the sugar and xyz were supplied, and I think it's a modified, improved version of the collaboration of sisterhood and women coming together to support each other and their households financially.”

She said stokvels played an invaluable role in communities when men were forced to work far from home in the mines and women had to make ends meet.

Cebile Magongo, Strategic Business Developer at FNB Cash Investments said that historically stokvels were used as collective savings vehicles to help adults raise families and create communities of like-minded people.

Today senior citizens continued to embrace this culture while passing on knowledge and principles to younger generations, she said.

Magongo said there were a variety of reasons why senior saved their money in stokvels, which included social benefits like organising group trips or gathering for events at various locations.

“They believe that it's crucial for people of their age, as it helps them to socialise, because they are likely not to be actively working and may use stokvel gatherings for purposes other than just collecting contributions,” said Magongo.

FNB’s data also showed that stokvels with more senior members were prevalent in the Eastern Cape with 34%, followed by Limpopo with 28%. It said this wasn't surprising as the system started out as stock fairs and evolved into stokvels in the Eastern Cape.

“Stokvels have been instrumental in promoting a culture of saving and encouraging groups to save towards a common goal. We continue to see this as more seniors are becoming cautious about their finances and often prefer to save in stokvels because of the low risk and familiarity with the stokvel concepts,” Magongo said.