This sector now has more than R50 billion in deposits with more than 400000 stokvels with close to 12 million members. The survey found that Nedbank was second with a 19percent share followed by First National Bank with a 13percent share and then Absa with an 11percent share.
The name stokvel originates from the term “stock fair,” which describes cattle auctions run by English settlers in the 19th century. These stock fairs were a platform for farmers and labourers to socialise and pool money together to purchase livestock according to African Response. In essence, they are savings clubs as members of a stokvel come together and make contributions of an agreed amount on a regular basis, usually monthly.
The club asks members to join and decides on how the pool of money is shared, whether it is a rotating lump sum payment to the members or saved and shared at the end of the stokvel period, which is commonly six months or a year. There is a large amount of trust involved.
The group structure helps individuals achieve their savings goals as they are encouraged by stokvel members to meet their monthly obligations to the stokvel. This may be one of the reasons why the personal saving rate became positive in 2017 for the first time since 2005, according to South African Reserve Bank data.