South African economy has a secret weapon in stokvels – Details

South African economy has a secret weapon in stokvels – Details

If harnessed very well, South African economy has a secret weapon in stokvels that could boost the economy and create businesses.

The money embedded in stokvels is great. Not less than R44 billion is collectively saved in 820,000 stokvels in South Africa.

It simply means that the members of these savings community could buy some South Africa’s biggest companies in cash.

Reportedly, the cash flowing through these stokvels tops the annual cashflow of most of the biggest companies in South Africa, including FirstRand and Vodacom.

According to research by the National Stokvel Association of South Africa, some 11.4 million South Africans are members of stokvels. Together they would form the second largest province in the country.

The word stokvel derives from “stock fair.” In the 19th century British settlers would buy cattle at stock fairs where participants rotated the management of the auctions. In the same way, groups of South Africans pool savings and take turns receiving a fixed amount on a regular basis.

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Banks have also followed the trend. Now Stokvels create wealth … Rudzani Mulaudzi, an advisor at SVCapital, told Business Insider South Africa. He recently published new research on stokvels as part of a thesis for the University of Cape Town Graduate School of Business.

The real magic happens when stokvels invest directly in small businesses, which is happening in countries like Ghana, Nigeria and Kenya.

Stokvel are built on trust and personal relationships.

Most stokvels have taken over some companies in South Africa and they have been wonderful with the management.

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