Meet stokvels making money

TIPS: HOW COMMUNITIES MAKE MILLIONS TOGETHER IN GROUPS >>→ Technology, like using WhatsApp, is transforming how they operate.

- Ina Opperman

Stokvels remain the untapped “human banks” of South Africa, making millions together every month.

There has also been an increase in younger and higher income members, while the integration of technology, like using WhatsApp, is transforming how the stokvel groups operate.

An online and video-based study by market research specialist Ipsos last year revealed SA's R50 billion stokvel sector is made up of more than 800 000 groups with 11 million members. It is a vast network of dynamic “human banks” in the South African economy.

This stems from the finding that, despite the development of banking products aimed at these savings societies, cash remains the preferred mode of operation for most stokvels.

In addition, the study highlights a distrust of traditional banking institutions, fuelled by perceptions of high fees and bureaucratic red tape, such as lengthy account opening procedures, inflexible withdrawal restrictions and hidden charges eroding savings.

Busisiwe Mahlaba, client information officer at Ipsos, says with an overall increase in membership and the creation of more diverse stokvels, members now have a greater array of choices regarding who to partner with on their financial journeys and how to structure their administration systems to fit the group.

"Therefore, banks must address continued member resistance with simplified seamless experience that fosters trust and buy-in.