South Africans are such huge fans of this savings scheme that, according to a survey by African Response, R44-billion (US$529-million) is currently invested in stokvel savings.

Why stokvels are better than Groupon

Thanks to the money he gets from his stokvel membership, Gerald Pitsoe will soon be able to make his slightly damaged silver-grey luxury Mercedes look as good as new .

Pitsoe, a Metro Police officer from Protea suburb in Soweto, belongs to a masigolisane (rotational) stokvel. In his stokvel there are more than 20 members who contribute weekly to a joint fund. Each Monday the collection of money is paid out to one member.

A stokvel is a group saving scheme, helping members with financial assistance when needed. They are set up by a group of friends or a community organisation to help save or invest, to provide for burials, to buy groceries in bulk, or even for special events like birthdays.

“I like this type of stokvel. It helps you. You can use other people’s money for your own projects. But you must remember – you have to return the favour,” said Pitsoe.

With rotational stokvels, members contribute a minimum of R1 000 ($120) a week into the pot. Amounts can go up to whatever people can afford.

South Africans are such huge fans of this savings scheme that, according to a survey by African Response, R44-billion (US$529-million) is currently invested in stokvel savings.

Different stokvels for different people

People from different backgrounds, with differing needs, make use of the different stokvels.

John Lebetso, an informal trader from Diepkloof in Soweto, is a member of three savings stokvels. He meets with other traders every Monday, Wednesday and Thursday to pay in their contributions and talk money matters.

His stokvels have different minimum contributions, with the smallest being R300 ($36) and the highest being R1 000 ($120).

Although Lebetso’s stokvels are paid out annually, members do have the opportunity to draw their money every six months. Money can also be borrowed from the stokvel, at 20% interest.

“It helps a lot if you can’t save money on your own. It’s also encouraging as you’re around people who have more money than you but are entrenching a culture of saving in you,” said Lebetso.

Nkgadima said: “Stokvels continue to pervade all levels of society and they are here to stay.”

Read more: Media Club South Africa 

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News and reviews from Bloemfontein and South Africa.