Stokvels – a robust market in the area of traditional collective saving are estimated to be worth R25 billion. There are 8.6 million stokvel members in South Africa which represents 23% of the adult population and an estimated 421 000 stokvels in total. This is according to African Response’s latest survey on the status and market potential of stokvels.
“Following an initial investigation into this market in 2011, African Response used the Khayabus (the Ipsos Omnibus) to conduct a rigorous and nationally representative survey to reveal the current status and potential of this market,” explains Mamapudi Nkgadima, MD of African Response. “While the numbers from 2011 cannot be directly compared to those of the 2014 study (due to a difference in the definition of stokvel membership) it does point to very interesting changes in the dynamics of stokvels over the past few years.”
Types of Stokvels
Stokvels are group savings schemes providing for mutual financial assistance as well as social and entertainment needs. These take different forms depending on the purpose of the scheme… ranging from burial, savings/money, grocery to investment and birthday celebration stokvels.
A very noticeable trend in the stokvel population is that of burial societies: “they are by far the largest segment in the stokvel universe and have overtaken saving stokvels as the ‘major’ type of stokvel” says Nkgadima. “It is a fact that many spend fortunes preparing for death in their community or family, and limited resources towards saving or investment. Funerals – or the prospect of a funeral – are an expensive issue in the average stokvel member’s life”. Saving stokvels account for the next biggest group, followed by grocery stokvels.
Consolidation and Rationalisation
“What we have found as a general trend, is that stokvel members are rationalising the number of stokvels that they belong to” states Nkgadima. As an average, stokvel members belong to 1.3 stokvels and the number of individuals belonging to a stokvel has increased to an average of 31 members (per stokvel).
“This makes sense in the context that burial societies are now the biggest segment in the stokvel market – as they are typically bigger groups” states Nkgadima. Membership of burial stokvels can go up as high as 100 members per group, while savings, investment and birthday stokvels reflect a much lower membership per stokvel.
In conclusion, Nkgadima states “what is important to remember is that this market is worth a massive R25billion and represents a huge segment of our economy. It is worth getting closer to stokvels and understanding areas where value can be added to ensure that stokvels are contributing to our economy while educating stokvel members on the best way to save for a better future.”