SA’s stokvel sector goes high-tech – and urban

Reading Time: 4 minutes

For decades, South Africa’s stokvel sector has operated on the fringes of the formal financial system, financing everything from groceries and school supplies to houses and household appliances. In recent years, however, stokvels have gained increasing legitimacy as a powerful savings vehicle.

It’s estimated that nearly 12 million South Africans are members of stokvels, the informal savings clubs that involve members pooling savings and taking turns to receive a fixed amount of money. In all, they attract around R50 billion a year in investments, making them a significant force in the country’s economy.

While around a quarter of the stokvels in South Africa are burial societies, which pay out in case of death, the uses for stokvels are numerous: grocery stokvels, where members save to buy food in bulk; investment stokvels, that invest in shares or small businesses; and even holiday stokvels, where members take turns to travel on their windfalls.

“Fintech is pioneering the way that the financial management needs of stokvels are serviced. The adoption of such technology is being driven by young, urban populations, with many members using modern financial technologies to better manage their investments,” said Josephine Mbire, Head of Customer Support at South Africa’s newest digital banking platform, Spot Money.

And now, Spot Money, with its app Spot, which offers customers transactional banking; a free monthly account and a marketplace for everyday needs, is helping stokvel members manage their money in a different way.

“There has long been a need amongst stokvel members for greater transparency of where their money is going, and assurance that it’s being handled prudently. Traditionally, one person would collect all the money, and they would effectively hold all the power over how and when payments would be made, with other members having little insight into the movement of their investments,” explained Mbire.

With Spot Money’s Shared Account feature, up to 10 people can jointly manage their finances easily through a mobile app. It’s also cost-effective, as there is no monthly account fee.

“Until now, shared accounts meant a primary account holder would provide limited access to chosen beneficiaries. Our approach makes all account holders equal partners and gives everyone full sight of what’s going on in the account: they can see who paid and received money, and are able to top up and make payments out of that account through a range of channels,” said Mbire.

Spot’s scan-to-pay feature also means that stokvel members don’t have to risk carrying large amounts of cash when making group purchases. And when stokvels use the Spot app to pay with a wiCode at a cashback partner, such as Checkers, Shoprite & USave, they can earn instant cash back into their Spot Rewards wallet.

“Stokvels have been around forever, and it’s high time the formal financial sector started catering to them. We believe Spot offers stokvels a great way to manage their money more effectively,” said Mbire.

For decades, South Africa’s stokvel sector has operated on the fringes of the formal financial system, financing everything from groceries and school supplies to houses and household appliances. In recent years, however, stokvels have gained increasing legitimacy as a powerful savings vehicle.

It’s estimated that nearly 12 million South Africans are members of stokvels, the informal savings clubs that involve members pooling savings and taking turns to receive a fixed amount of money. In all, they attract around R50 billion a year in investments, making them a significant force in the country’s economy.

While around a quarter of the stokvels in South Africa are burial societies, which pay out in case of death, the uses for stokvels are numerous: grocery stokvels, where members save to buy food in bulk; investment stokvels, that invest in shares or small businesses; and even holiday stokvels, where members take turns to travel on their windfalls.

“Fintech is pioneering the way that the financial management needs of stokvels are serviced. The adoption of such technology is being driven by young, urban populations, with many members using modern financial technologies to better manage their investments,” said Josephine Mbire, Head of Customer Support at South Africa’s newest digital banking platform, Spot Money.

And now, Spot Money, with its app Spot, which offers customers transactional banking; a free monthly account and a marketplace for everyday needs, is helping stokvel members manage their money in a different way.

“There has long been a need amongst stokvel members for greater transparency of where their money is going, and assurance that it’s being handled prudently. Traditionally, one person would collect all the money, and they would effectively hold all the power over how and when payments would be made, with other members having little insight into the movement of their investments,” explained Mbire.

With Spot Money’s Shared Account feature, up to 10 people can jointly manage their finances easily through a mobile app. It’s also cost-effective, as there is no monthly account fee.

“Until now, shared accounts meant a primary account holder would provide limited access to chosen beneficiaries. Our approach makes all account holders equal partners and gives everyone full sight of what’s going on in the account: they can see who paid and received money, and are able to top up and make payments out of that account through a range of channels,” said Mbire.

Spot’s scan-to-pay feature also means that stokvel members don’t have to risk carrying large amounts of cash when making group purchases. And when stokvels use the Spot app to pay with a wiCode at a cashback partner, such as Checkers, Shoprite & USave, they can earn instant cash back into their Spot Rewards wallet.

“Stokvels have been around forever, and it’s high time the formal financial sector started catering to them. We believe Spot offers stokvels a great way to manage their money more effectively,” said Mbire.