SA’s tough economy won’t keep stokvels down – deposits up by 42%

If you grew up in South Africa, then you probably know that the year-end is not the same without stokvel payouts and distribution of groceries among members.

This year is no different.

Despite 2023 being a financially challenging year for most due to constantly rising prices and record-high inflation, stokvels have seemingly survived the economic tide.

First National Bank (FNB) recently revealed its customers’ net stokvel deposits had increased by 42% this year, surpassing R8.3 billion in total member contributions as they continued to save up since 2019.  

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Nevermind high interest rates

Sfiso Nkosi, Product Growth Head at FNB Retail Cash Investments said the surge in stokvel savings came against the backdrop of high interest rates, adding that it highlighted the importance of financial discipline among those who use stokvels to accumulate savings.

Nkosi said people who are part of stokvels generally have clear savings goals, ranging from putting money away for home-related expenses, large purchases and even school fees.

Meanwhile, CEO of FNB’s Personal Segment Lytania Johnson said stokvels were still a popular savings option.

“Stokvels remain among the most popular saving options among many of our customers, who earn entry-level to middle income,” she said.

Nkosi warned stokvel members against using up all their savings during the festive season.

“As we approach the festive season period, we also urge members of stokvels to avoid exhausting their savings so they can generate even better returns in the future,” he said.

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Useful benefits

Apart from enabling members to be part of a community of like-minded individuals, joining a stokvel presents some useful benefits.

• Saving for a rainy day
• Being held accountable for monthly contributions promotes financial discipline.
• No instant payouts – unlike a personal savings account which can be accessed at any time.
• Saving towards a common goal can be encouraging.

Beware of scammers

Although stokvels are lucrative investment options, the rise of online scams in recent years has rung an alarm for many – requiring potential members to exercise caution when joining stokvels.

Scammers have preyed on innocent victims often convincing them to join social investment groups, and promising high returns on investments – only to vanish with their money.

Here are some useful tips when choosing a stokvel.

• Do your homework: conduct thorough research about the stokvel and its founders.
• Form stokvels with people you know and trust such as family and friends, instead of strangers.
• Confirm banking details: verify account holder information.
• Avoid making large investments in one go.
• Constantly follow up on your investment.

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