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- Old Mutual says the perception that stokvels are still predominantly for low-income households is being challenged.
- People save meaningful amounts through their stokvels every month.
- Members are also turning to stokvels for help on rainy days.
- For more stories, go to the News24 Business front page.
More and more South Africans are turning to old and trusted stokvels, not only to save, but for help during times of financial hardship.
Old Mutual, which has been tracking the growth and popularity of stokvels in the country for years, estimates that it is now a R45-billion industry. And it continues to grow rapidly, with the number of stokvel groups in the country estimated to be more than 800 000.
In Old Mutual's last Savings and Investment Monitor, more than half of its black Old Mutual Mass and Foundation Cluster (MFC) clients indicated that they had unbanked cash. The number was significantly higher among younger customers, aged 18 to 29, as 68% sat with unbanked cash. Where did they keep that cash? Stokvels.
More than a quarter of black metropolitan working households said they preferred to save through a stokvel or savings club. One in two black MFC customers were part of a stokvel, and almost two-thirds of those (61%) belonged to more than one.
The average rand amount people save through stokvels has also been rising, even though South Africans' real incomes have not been growing for several years. For instance, in 2022, Old Mutual customers belonging to stokvels saved an average of R1 214 a month, growing from R856 in 2018.
The head of Old Mutual's Foundation Market, Sanelisiwe Nkuta, said it challenged the perception that stokvels were predominantly for low-income households. She said stokvels were no longer what they used to be.
In the past, they were simply a vehicle for small amounts of savings for basics, such as December groceries and other short-term consumption goals.
"Stokvels have progressed in both the way their role is perceived and in the way they operate," she said.
She pointed out that there were more stokvels which people used to save for holiday travel and other bigger commitments.
One other growing use of stokvels is becoming a lender to their members in difficult financial times. In 2022, 15% of respondents in the last Old Mutual Savings and Investment Monitor said they had to borrow from their savings club or stokvel to make ends meet at some point. That figure was higher in 2021 at 19% as respondents reflected on their savings and borrowing behaviour from July 2020 to June 2021.
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Nkuta said rotational stokvels, where members contribute a fixed amount of money weekly, fortnightly or monthly, were the most common. And, since each member receives a lump sum payout on a rotational basis, Old Mutual believes it has helped people rely on the money in bad times and practise the habit of saving to support themselves on rainy days or even to grow their wealth.
Asked whether members who borrowed from their stokvels were those who struggled to get bank loans or who had overextended themselves, Nkuta said it was a combination of factors.
"However, we cannot rule out that it's [possibly] mostly people who cannot access loans through formal lending institutions," she added.
