Latest stats on Stokvels released

"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.”

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 stokvels, savings/money stokvels, grocery stokvels to investment stokvels to 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 - is an expensive issue in the average stokvel member’s life”. Saving stokvels account for the next biggest group, then grocery stokvels..

"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 The number of individuals belonging to stokvels 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 goes up as high as 100 members per group, while savings, investment and birthday stokvels reflect a much lower membership per stokvel.

"Being quite ‘essential’ needs, burial stokvels and grocery stokvels would be those with higher memberships” explains Nkgadima. "Savings, investments and birthday stokvels would yield lower membership as these stokvels are generally created amongst closer groups of friends.”

Looking at the value coming from contributions, we can see that burial societies yield lower contributions as compared to the other types of stokvels. However, burial stokvels have higher membership and are highly concentrated. The average contribution for a burial stokvel is R134 per month per member – much lower than the average across the different types of stokvels, which is R190 per month per member.

"Less than half of what stokvels collect - in their entirety - gets saved or invested and this is an area that needs to be looked at.” states Nkgadima. "Stokvel members should be encouraged to explore value adding ways to strengthen their collective savings.”

"What is important to remember,” states Nkgadima, "is that this market is worth a massive R25 billion, 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”