Make more money with group savings

Members are being educated on other investment opportunities

Education is the key to the successful use of stokvels to uplift the lives of largely unbanked black people, says Busi Skenjana, managing director of BSK Marketing.

She has enlisted Makwe Masilela, a stockbroker at BP Bernstein, to educate stokvel members about investing in such formal vehicles as shares of JSE-listed companies.

Every second black person in South Africa belongs to a stokvel in the form of burial societies, saving schemes, grocery-buying schemes and jazz clubs, according to a survey by African Response released in November 2011.

There are 811830 stokvels with about 11.4- million members - amounting to about 40% of the population and worth an estimated annual R44-billion, largely sitting in bank savings accounts.

"What do we do with this huge amount?" said Skenjane.

"Do we invest it or do we just transact? A lot of education is needed because most stokvel members do not know the difference between savings and investments."

Skenjane, who is going around the country on her education campaign, said stokvels enforce a culture of saving among blacks and could propel people to bigger investments.

"Stokvels have seen people being able to buy shares in JSE-listed entities as a collective," she said.

Masilela said banks have created special accounts for stokvels and have drafted a constitution for stokvel members to adhere to.

"This tells you that banks have realised that there is money to be made in stokvels.

"The money is standing idle in savings accounts as most stokvels share their savings [only at] year-end," he said.

Masilela said BP Bernstein has 60 to 70 stokvels on its books.

"I have always wanted to get in touch with someone who has a comprehensive understanding of stokvels and to work with to share my financial knowledge," Masilela said.

"What I have picked up during my interaction with stokvels is that when you educate them, they get even more interested."

Skenjana, herself a member of a stokvel that bought a stake in the Kruger Park Lodge in Hazyview in Mpumalanga in 1998, has established a specialised publication, Stokvel Voice, to speak directly with stokvel members.

"The message is that stokvels can progress from just being burial societies and groceries-buying syndicates to actual cooperatives. Once they become cooperatives they get a legal-entity status that could have the power to borrow money with almost a guarantee to pay," said Skenjana.

Every issue of the publication features a stokvel that could be used as a best-practice model for others.

Skenjana said some family stokvels have managed to save seed capital for starting a strong business.

"You could see stokvels instigating a spirit of entrepreneurship in communities in the townships," she said.