BUSINESS
Stokvel Column
24 Years of Stokvels
and Financial A S in Institutions t of the National Founder and presiden South Africa, Andrew of Stokvels Association ese e strides made by th th to in s ok lo e, el kh s Lu mes over two decade he sc ng vi sa ” al m or d “inf en officially recognise ago since they have be s. by commercial bank
with NASASA at the A-Train Night Club in Soweto on 25 August 1988 by myself and Bob Tucker, former Managing Director at Perm. By the end of 1988, 13 000 accounts had been opened, with a total balance of R19 million. By the end of 1989 the number had grown to 36 000 accounts with a total balance of R96 million. By the end of February 1990, 44 500 groups had opened accounts with Perm. By July 1991, Perm claimed to have about 10% of the stokvel business. “We have 75 000 stokvel groups in our books,” said Richard Ford, former Manager (Quickcash Marketing) at Perm.
As predicted in my book ‘Stokvels in South Africa’, in 1990, Perm had indeed R2 000, a figure that exceeded faced vigorous competition from other edbank through Perm the average balance on all other financial institutions for the stokvel (Previously the South African transmission or savings accounts. market in the past years as formal Permanent Building Society, a business learnt more and more about division of the Nedcor-Group) Based on this information, Perm was the first financial institution in South commissioned research into the stokvel the stokvel movement. Other banks followed in Perm’s footsteps by branding Africa to recognise the potential to do market in 1986. When asked to design various products to attract stokvel funds. business in the informal savings sector. the ideal product; respondents listed Standard Bank launched their stokvelthese six requirements: type product known as the Society How then did Perm end up with a large Scheme, amid protest from the informal black client base? And what prepared • The account was to be book-based, in sector. It is a fact that all major banks Perm for the opportunities that arose in other words, no plastic cards. A savings have some form of dealing with the the stokvel market? book can be taken to meetings and all stokvel market today, including the Post the members shown how much money Bank and Ithala Bank. The story goes back to the 1960s. In was in the account. those days building societies did not Since the first forays of Perm into the have segregated banking halls. They • The club decided how many, and who, stokvel arena, South African banks actively encouraged their clients to use should be authorised to sign had become increasingly interested their savings as an alternative to bank for withdrawals. in having a share of this market. Today cheque accounts, by offering unlimited all the major banks have a customised free cheque withdrawals. And they • There were to be no charges debited savings product for stokvels. fought for market share by offering to act against the account. as paymaster for companies paying their The banks all required stokvels to staff via transmission accounts. • A better- than – average rate of present their constitutions and to interest was to be paid, and the rate appoint a certain number of members Perm imposed no limitations on was to rise as the balance on the as signatories. The signatories have to minimum loans, was the first to account increased. comply with the Financial Intelligence recognise total household income as Centre Act (FICA), and thus have to a qualification to service the loan (as • No minimum balance was to present proof of identity and a fixed opposed to the breadwinner’s income), be imposed. address, among other things. We noted and was the first to lend to single black that, because some stokvels had a rather • And, after distribution of the savings women. Through its policy and actions short lifespan, the banks had adopted among members at the end of the Perm earned the respect and support of different strategies to encourage stokvel many black people throughout year, the account was to remain open members to keep their deposits in the country. so that the club could start saving the bank for longer. Standard Bank’s again in the new year without having In 1984 Perm’s Eastern Cape region Society Scheme, for example, waived to open a new account. conducted a study on customers’ the monthly management fee and bank savings habits. The survey showed that Perm wasted no time in deciding to charges on debit transactions, and accumulatively, branches in their the enter into a working relationship with a entered the stokvel into a monthly “save region had more than 2 500 savings credible, community-based organisation, and win” competition if the account accounts from stokvel groups, with namely, the National Stokvels balance remained above R5 000. combined balances exceeding R5 Association of South Africa (NASASA). million. This meant that the average The Club Account was officially launched Lukhele is also the author of the book Stokvels in balance on each account was around as a national product in conjunction South Africa
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