Jargon buster: Stokvel

The word “stokvel” has its origins in a practice carried out at rotating cattle auctions or stock fairs in the Eastern Cape in the 19th century—farmers and labourers attending these fairs would exchange ideas and gamble their resources.

There are also suggestions that the stokvel had its origins in burial societies formed by African migrant labourers.

When black South Africans were denied access to the formal banking sector during the apartheid era, stokvels provided an important alternative banking or savings vehicle.
Today, a stokvel is an informal pooling and sharing of resources, including knowledge and funds, and in effect works as a community savings club.

According to the Old Mutual Savings Monitor, members contribute a specified monthly sum to the club and each of them gets to keep all the contributions when their turn in the rotation arrives.

A stokvel is usually started for a specific purpose, like a funeral fund, but a typical stokvel functions as a savings or investment club. Stokvel models vary, so you can have a revolving savings unit, a shared buying scheme or a loan scheme, for example. Each stokvel has a chairperson and treasurer responsible for administration, but decisions are made collectively.

How do consumers make money as part of a stokvel?

• They save money together and collectively earn better interest.


• They encourage each other to save.


• They use their pay-outs for starting a business.


• They have the option of saving for a longer, fixed period even though stokvels usually save for emergencies. In this way, they can invest collectively.

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