Stokvel strategic review beyond Covid-19 outbreak
Will Stokvels survive these harsh realities of Covid-19 and its uncertainties? This is a question I asked myself as we were approaching end of March 2020; but having dealt with Stokvels for more than 15 years, I knew that it was also a red robot for them; they needed to find ways to navigate this economic interruption. It is definitely not business as usual, Stokvels need to effectuate and move to the new normal.
Few experts in the Stokvel fraternity have been advocating for the idea of Cashless Stokvels; the question is “How?”,this is what most of the experts in the Stokvel trade are lobbying for, but looking at the nature of Stokvels,this might not be an easy transition as it seems, taking into consideration the following:
• As we may know,Stokvels serves as a tool to extend credit to their members, e.g. a hawker will save money throughout the month in cash and wait for the Stokvel day to contribute with the expectation of receiving more, that is a “borrowing Stokvel”. To facilitate this type of Stokvel (majority of members are between 35yrs to 65yrs), there is a need for a meeting, to consolidate contributions(monthly contributions+interest +loans) and share accordingly.
• Again,Stokvel is a safety net for most South Africans, they need extra cash each month to cover their monthly expenses especially the unemployed and underemployed. They need to meet in order to make decisions as to how much more each member will receive.
• Stokvel is the only way of inculcating the culture of saving to South Africans. However, this has proven not to be real savings as the investments are from January to December, Stokvel need Long Term Savings and Investment.
Lockdown has taken away that once-a-month social gathering that serves as a social, emotional and spiritual support for some Stokvel members. This is where they share family problems and also share their happy moments and achievements. It is actually not surprising to see the rise in Gender Base Violence during the corona virus breakdown; the element of social gathering of Stokvels is eliminated thus causing an emotional anguish. Trust is the lifeblood in Stokvels and because they are very liquid, it will take time to convert most members to Cashless Stokvel especially the elderly. Money is energy, online or cashless transactions will threaten their trust. Being indebted and having credit accounts have taken away the excitement of having real/hard cash in our pocket, therefore Stokvels are the only way to bring back that energy.
Cashless Stokvel can be introduced periodically while still using meetings as means to administer the Stokvels books and objectives. What we need to understand is that Stokvels is an indigenous knowledge; members do not use manuals to mitigate challenges. Unconsciously they use trial and error and eventually come up with an amicable solution. The Covid-19 lockdown has crippled the economy, and for Stokvels it’s a ripple effect. Majority of Stokvel members are LSM 1-5 and for LSM 6-8 mostly underemployed. With no extra income from Stokvels they are not able to pay their debts; insurance, clothing accounts, etc. Stokvels will surely struggle during this period of Covid-19 outbreak but they will surely bounce back. Beyond Covid-19 outbreak, my advice is such that, Stokvel groups must think of other investment portfolios to generate more capital, think of Buying Property, Shares, Imports and Exports.
Lindy Mataboge (Stokvel Coach)MD@Lindy Mataboge Training and Development
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