Stokvels: Know the red flags
There are several types of stokvels you could join, but there are pitfalls in some instances that you should be aware of.
POLOKWANE – A stokvel is a savings or investment society to which members regularly contribute an agreed amount. These members also receive a lump sum payment when it is their turn to do so. Review did some research and spoke to some locals to gather more information about stokvels.
Red flags to look out for before you join a stokvel:
Most people are often in need of money, and are ideal victims for stokvel scams. With this in mind, Review spoke to Molatelo Pertunia Phooko, who has been in a stokvel society for more than 10 years. Molatelo explained that if the stokvels success relies mainly on recruiting new members, then it is a sign that you should be careful. “If it is a faceless operation and you do not know the people who are joining, then the money can just as easily disappear.”
She explained that if the stokvel offers high returns for a minimal investment, this should also raise a red flag. “Some stokvels are a long term process and may take sometime to see your returns.” A stokvel has to have a constitution that it follows to ensure that your money is safe.
The stokvel has to register with the National Stokvel Association of South Africa (NASASA) which governs the deposit-taking process of your money. If the stokvel does not have a leader, chairperson or a treasurer and it does not hold monthly meetings where bank statements can be rotated among members, then it also raises alarm.
“You have to know the people you are working with and their addresses, in case anything happens or a member fails to pay. It is important to have an established trust.” She advises residents to do their research before they decide to join any stokvel and to make sure there is transparency among the members.
Types of stokvels:
Stokvels have existed for many years but have also become a trend among youths. There is a variety of stokvels which include a birthday stokvel, a burial society, a grocery stokvel and a money stokvel. Review spoke to a few residents to find out what they thought of these stokvels.
Katlego Gololo from Makotse says a birthday stokvel means you don’t have to worry about hosting a party and catering for a lot of people. She says what happens is that you tell the other members what your favourite cake is. They then buy the cake, decorations and get everything done when it is your birthday. Nthage Malope says being part of a burial society has helped a lot of people at Makotse village to bury their loved ones with pride and dignity.
Death comes without warning and can cause a lot of financial stress to some families. A burial society helps as money pays out to assist when a member has passed on. In some societies, food parcels are given, and they help with catering and they provide chairs, a tent and cutlery.
Pretty Mogotlane from Lebowakgomo says a grocery stokvel is beneficial because you do not have to worry about buying groceries when it is your turn to receive from the stokvel.
Safety tips for joining a stokvel:
Malose Mphahlele, the Manager at Mphahlele Holdings Store in Lebowakgomo, shares safety tips for stokvel users.
“Instead of people saving their grocery money in the bank, we prefer that they buy coupons in our store. We have an agreement with them where they contribute the same amount every month and at the end of the year, they can use the coupons to purchase groceries in bulk from our store. This is safe and we have never experienced any difficulty or scams with our stokvel method.”
Police Spokesperson, Capt Mamphaswa Seabi also shared some safety tips.
“Stokvel members must open a bank account and not keep the money on them. When they share money after their maturity period ends, they must select a safe place to keep the money. I advise them to use EFT as a payment method. People must be careful with people who try to convince them by saying that if you invest this much, they can double it within a short period of time. Members must have an agreed constitution that governs them so that at the end, they all benefit from the investment.
When they buy groceries, they must make sure the person who buys it, is a reliable person so that they do not run away with their groceries. Always keep the proof of payment and avoid joining online stokvels. We prefer that people join stokvels with people they know in person,” he said.
