In the early 19th century, farm workers who wanted to own livestock would pool their resources and buy cattle from were then known as stock fairs. Now commonly known as stokvels, these collaborative, community based pooled funding structures have remained an integral part of South African society to this day. According to the National Stokvel Association of SA (Nasasa), at the beginning of 2022, there were around 810 000 active stokvels in South Africa, with a combined total of more than 11 million members and collecting over R50 billion in savings contributions from those members every year.
While the purpose of today’s stokvels differs from the livestock purchasing power they provided two centuries ago, the value they offer their members remains indispensable to most. Stokvels have evolved into a range of targeted financial structures that align closely with the basic human needs identified by behavioural scientist Abraham Maslow in A Theory of Human Motivation, which was published in 1943.
Maslow’s hierarchy of needs argues that the needs of all humans can be classified into five key categories, which, in today’s terms, translate to basic survival, financial safety, wealth accumulation, financial freedom and estate planning to benefit future generations. When you look at the different types of stokvels in South Africa, as well as the main reasons why most members join them, it appears that Maslow was spot on with his human motivation theory.
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The most populous stokvels in SA remain – grocery, burial, money, and savings, which closely mimic the human compulsion to move up the hierarchy of needs. And the independent research done by African Response indicate the reasons why most people join stokvels bears out this theory. African Response is an independently owned insights, research and strategy company in South Africa that helps organisations make better and informed decisions through a deep understanding and appreciation of people, markets, industry, and business dynamics. Their insights include Stokvel surveys.
The findings of the research indicate that pay outs from money and savings stokvels are typically used for groceries, personal items, settling debt, paying for education, household renovations and appliances and savings and investments, all of which are vital elements required by most people in order to live the lives and achieve the financial security they desire. These characteristics of stokvels are particularly relevant to women, because they make a stokvel the ideal way for South African women to ensure they have the money they need to care for their families, and in many cases to build their own financial security.
Generations of patriarchal attitudes toward women and money have created a culture in which many South African women are either overly dependent on their male partners for their financial wellbeing, or they don’t have the knowledge or means to ensure their own financial wellbeing, but stokvels are helping to change this reality for growing numbers of women in this country, as evidenced by the fact that 60% of stokvel members are female.
Perhaps understandably, the demographic breakdown of stokvel membership changes slightly depending on the type of stokvel considered. Burial stokvels, for example, have a fairly equal split between male and female members, while women members massively outstrip their male counterparts by 72% to 28% in grocery stokvels. This makes sense given that women in South Africa remain the primary homemakers.
Irrespective of the gender make-up of any stokvel though these robust and proven community savings structures have the potential to help women achieve financial resilience and transform their lives and futures.
While the global threat of Covid-19 appears to be subsiding, the world remains a very uncertain place, characterised by economic and market volatility, unprecedented stock movements, increasing cost of living, and geopolitical tensions, all of which have made it imperative that we apply ourselves to making sure that our money is secure, and that it works as hard as it possibly can to enable us to have the futures we want. And stokvels are an ideal way for millions of South African women to do that.
Sifiso Nkosi, Stokvels and Group Savings Head at FNB Cash Investments.