In the vibrant wall-hanging of South Africa’s diverse cultures, stokvels are like hidden threads, weaving communities together and helping people achieve their financial dreams. These savings clubs enable members to pool resources with friends and family and work towards a common goal.

This could be buying a home, funding education, taking care of each member’s most pressing expense on a monthly rotation, or simply having a safety net for financial emergencies. Stokvels can even be used as investment clubs – pooling your savings can give you access to long-term investment products with better growth potential than a savings account.

Here’s a quick summary of what you need to know about stokvels, and how to start one.

What is a stokvel?

Legally speaking, a stokvel is a ‘community-based deposit-taking organisation’. A group of people each contribute a fixed amount of money regularly, which is saved in an account that earns interest. This pool of funds can then be distributed among the members in several ways, depending on the type of stokvel (see below). Stokvels are an effective way to give each member a substantial amount when they need it.

Stokvels have long been popular with the older generation in many South African communities as a way to create mutual support for financial discipline. The tradition is deeply rooted in the spirit of Ubuntu – ‘I am because we are’. Younger South Africans going through tough times financially could also benefit by exploring the advantages that stokvels offer.

The National Stokvel Association of South Africa (Nasasa) is a nationwide body that helps groups set up and manage stokvels. The founder members of a stokvel need to create a constitution to lay out its name, aims and objectives, leadership and executive committee structure, membership conditions, joining fee, monthly contributions, beneficiaries, payout arrangements, and any other rules governing stokvel operations.

Types of stokvels

• Savings
  These are the bread and butter of stokvels. Members contribute a set amount every month and give the entire month’s pot to 1 member to spend as they wish. It’s like hitting the jackpot, without the gambling – each member wins in turn.

• Investments
  Investing for the long term in assets like property or stocks is a tried and tested way of growing your money, but the entry-level deposits needed for these investments may be too high for your budget. By contributing with others to invest through a stokvel, your wealth can grow faster than it would if you were investing on your own. The Sakhisizwe Property Stokvel in Midrand started when a group of young professionals pooled their money to invest in property. Today, they own several rental properties, generating steady passive income and securing their financial futures.

• Burial societies
  Funerals can be expensive, and burial society stokvels provide a safety net. Members contribute regularly to cover funeral costs, ensuring that no family bears the burden alone. To avoid unnecessary conflict at a time when families are grieving, list the beneficiaries covered by the stokvel clearly in its constitution.

• Education
  Education is the key to a brighter future, and these stokvels help cover school fees, textbooks, and other educational costs. A stokvel dedicated to investing in the next generation will work differently from a savings stokvel – your money will earn more interest if you make no withdrawals during the year, then withdraw only enough for each member’s back-to-school expenses in December.

• Businesses
  Members pool their funds to provide the capital needed to start or expand businesses, or to buy property to rent out. The Orange Farm Community Stokvel started as a small savings group in Orange Farm, Gauteng. It has now grown into a thriving community of entrepreneurs. With their pooled resources, members started small businesses – transforming their lives, and boosting the local economy.

How to start a stokvel

• Choose your members: Gather friends, family, or community members you trust. Trust is the foundation of any successful stokvel.
  
  
• Set your goals: Define the purpose of your stokvel. Are you saving to buy something costly, to invest, or to cover emergencies?

• Draft a constitution and register with Nasasa: This might sound formal, but it is essential to outline the rules, contribution schedules, and member responsibilities. It ensures transparency and keeps everyone informed. You will need a constitution in place to register your stokvel with Nasasa.
  
  
• Elect an executive committee: Every organisation needs office bearers to handle the day-to-day administration. Your executive committee should include a chairperson to run members’ meetings and act on their behalf in legal matters, a secretary to take care of general communications, office admin, and recording the proceedings of meetings and any decisions taken, and a treasurer to manage the stokvel’s finances and authorise deposits and withdrawals.
  
  
• Open a bank account: For security, transparency, and convenience, open a stokvel account with a reputable bank. Nedbank offers registered stokvels a specialised Stokvel Account in which your money will earn competitive interest, with added benefits like funeral cover.
  
  
• Manage your stokvel: Keep detailed financial records, hold regular meetings, and ensure open communication among members. Transparency is key.

Protect yourself from stokvel scams

If you’re invited to join a stokvel, make sure it’s legitimate and not a scam. Here are some tips to protect yourself:

• Research: Check if the stokvel is registered with Nasasa.
• Transparency: Check that the stokvel communicates clearly and has detailed financial records. Avoid any stokvel that lacks transparency or has vague rules.
• Beware of unrealistic returns: If it sounds too good to be true, it is. Be very suspicious of stokvels promising unusually high returns.

Why choose a Nedbank Stokvel Account?

Apart from competitive interest rates that make your money grow faster, a Nedbank Stokvel Account offers these added benefits:

• Security: You need multiple signatories to make withdrawals, ensuring transparency and security.
• Low fees: We offer reduced banking fees specifically designed for stokvel accounts.
• Dedicated support: You'll have access to bankers who can guide you in managing and growing your stokvel.

A stokvel could be the savings solution you’re looking for – a way to stay motivated by friends and family while you save. It’s a great way to empower a community, whether you’re saving to build everyone a home, or you want to make more impact when investing, or even if you want to shop in bulk to make groceries cheaper.

Learn how to open a Nedbank Stokvel Account now.