Stokvels should drive social cohesion

2017-09-24 00:00

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As we mark yet another Heritage Day in our democracy, the public holiday and long weekend will be celebrated by our feasting on braai meat, chakalaka, pap and dombolo, and our listening to traditional, authentically African music while wearing colourful African attire.

However, this day also prompts the following question – have we truly defined our financial heritage?

When we speak of general financial inclusion in South Africa, one product that takes top honours is funeral insurance. This is followed closely by stokvels.

Stokvels refer to small groups of people making regular monetary contributions to a collective investment or burial scheme, formally or informally.

Stokvels have been popular in South Africa since the 1960s, particularly in townships.

People used to meet at social gathering places such as shebeens, churches and baking or cooking clubs, where they found like-minded individuals who shared common financial goals such as saving for holidays, school fees or funerals.

Each stokvel has its own constitution, which dictates the amount its members must pay weekly or monthly, as well as when the accumulated money is to be paid out, and the roles and responsibilities of each member.

To date, it is estimated that one in every two black adult South Africans is a member of at least one of the country’s 800 000 stokvels, which rake in an estimated collective total of R50bn a year.

It could be said that, initially, the main purpose of stokvels in the 1960s was social camaraderie, which soon developed into a common drive for financial inclusion.

But now that South Africa has found itself in a technical recession, the question of how stokvels can service their members in a broader and more meaningful way arises.

What could be the modern-day financial product, generated through stokvels, that we can one day celebrate as part of our heritage?

It is estimated that more than 10 million credit-active South Africans have fallen behind in one or more of their financial obligations.

But there is hope. While social movements such as #FeesMustFall and #DataMustFall highlight the plight of cash-strapped individuals and our ailing economy, they also depict the spirited attitude embodied by many South Africans.

Many of the informal subsectors of our much talked-about township economy could benefit from financial ubuntu by starting their own initiatives.

Recently, the taxi industry went on strike in protest against what it called the exorbitant prices of the Toyota Quantum minibuses it uses to transport people. Given the success of the stokvel culture, could the solution for the taxi industry lie in organising a similar purchasing mechanism?

South Africa’s economy is a mosaic of financial products, with some aligned to the heritage of this country and others – such as foreign exchange, stocks, bonds and derivatives – not yet understood.

The R50bn that circulates among black South Africans in stokvels highlights the potential we have to transform the financial sector from the ground up. Capitalising on stokvels may be the key to kick-starting our financial heritage.

Townships are a hive of economic activity and potential.

It is expected that economic growth will come from small businesses, but, because too little is understood about these enterprises, their potential remains, for the most part, locked.

By commercialising the social construct that is the stokvel and improving on the infrastructure of the extensive goods and services township market, we could unlock the lucrative potential of this hidden economy.

Heritage Day is about celebrating our various cultures and traditions, as well as embracing the diverse languages and religions that are protected by our remarkable Constitution. We activated to have this Constitution.

Likewise, the transformation of the financial economy will only happen when South Africans do something to effect this.

Given that R50bn, the question must be asked why modern-day stokvels have not been nationally and systematically organised to drive social cohesion, increase financial inclusion on a macro level and drive economic activities such as education, housing and entrepreneurship, thereby kick-starting the financial heritage we all long to establish.

Ramoenyane is an MBA candidate at Wits Business School, and the founder and director of Kasi Money, an initiative that dispenses financial literacy to the broader public, who are often excluded from the mainstream economic dialogue. Log on to

Read more on:    finance  |  heritage day

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