COVID-19 novel propels people to save
The COVID-19 pandemic has made it more pressing than ever for people to have savings in place, especially for the hardships that people are experiencing now and for the foreseeable future.
In our first webinar in July, experts in the stokvel industry experts discussed ways to make stokvel savings sustainable for the future. Stokvels are a dominant tool for saving money for many South Africans and are means for economic empowerment for many people.
South Africa has many different stokvels, with the grocery stokvels being the ones that are dominating or the ones that the black community understands. According to Sisandile Cikido, the Head of Retail Investments at Nedbank, there are over 800 000 stokvels in South Africa with over 11 million members contributing to stokvels.
Cikido says these numbers show that stokvels have done something right in terms of enabling individuals to access credit and different saving options often ignored by the mainstream financial systems. “It makes me very proud to see people who can come together because of a common core and create their economy create their source of funding,” she adds.
Development economist advises stokvel members
Silindile Leseyane, the founder of Sakhisizwe Stokvel Property, says stokvels are great for short-term savings, it is also critical to think about long term savings, such as buying assets.
“Property has been seen as one of the key cornerstones of creating and preserving wealth in the long run. I mean, if you look at what the interest rates are on savings accounts nowadays, is at a record low.”
So this is the perfect environment to say, if you have already got savings, or you want to save money again, put it somewhere where it can generate higher returns for you,” Leseyane adds.
Ntombana Mbele, a Development Economist says the pandemic has shown us that we cannot confirm anything about the status of the economy, as many people live from month to month.
She insists that stokvels should consider expanding their traditional savings for groceries and school fees, towards things that are going to diversify their risk, things that are going to increase their income propensity.
Leseyane warns that money under the mattress doesn’t grow. She advises that people need to find ways of actually putting money where it can then maintain its value over the long term.