Stokvels and savings clubs, popular among savers - research

2016-11-24 06:01
Stokvel for groceries is a growing trend. Photo: nosipho mkhize

Stokvel for groceries is a growing trend. Photo: nosipho mkhize

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

SOUTH Africans are becoming more dependent on informal ways to save money and are resorting to using stokvels­ or savings clubs.

Research by Old Mutual Savings Investment Monitor (SIM) reveals that 42% of households are dependent on stokvels as a savings tool. Just over a quarter (26%) of households rely on burial schemes and unbanked cash savings (17%). And 13% of households depend on grocery schemes. These informal savings vehicles are generally popular in black households.

Some factors that drive consumers to choose these informal savings vehicles are because they make funds easily accessible.

“It is easier to get a loan, and it is often at a better interest rate,” said Lynette Nicholson­, research manager at Old Mutual.

There’s also a cultural element to these informal savings vehicles.

“It’s a nice way for friends and family to come together. There is also pressure to save, people feel obligated to save because others are also saving.”

Grocery schemes are particularly popular among single mothers, said Nicholson. It operates as a “stokvel for groceries”.

Consumers pool money and then, during the holiday season for example, they buy in bulk and distribute the groceries evenly between each other.

“It’s a way to get things cheaper.”

Financial services providers can learn a lot from how these informal savings vehicles work to structure and develop new products, added Nicholson.

“There’s a lot that can be learnt in terms of how they operate, and their efficiency.”

Formal savings vehicles

Funeral policies are still the most prevalent of formal policies. Three out of four working metro households have a funeral policy. About 26% of households have education policies.

More people are also prioritising retirement, as they are living longer.

“They are using these years to plug money­ into retirement.”

About 59% of people have retirement products.

More than half (51%) of people have a pension or provident fund and a quarter (25%) of people have retirement annuity.

People are seeing the need to have more than just a pension fund.

“You need more to live,” said Nicholson.

Other formal products people rely on include banked cash savings (42%), formal products and policies (87%), investments (8%) and bonds (5%).

South Africans continue to use different sources of financial information and advice. The most common sources are friends and family, followed by financial advisors.

The internet is increasingly becoming a source of financial information.

However, consumers are still wary when it comes to buying certain financial products such as life insurance and investment products online.

“They still prefer to speak to a financial advisor and have contact.” - Fin24.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.
NEXT ON NEWS24X

Inside News24

 
PARTNER CONTENT
INFOGRAPHIC: New thinking required for retirement

Everything we believe about retirement is fast becoming outdated.

/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.