The Chronicle
Nqobile Bhebhe, Feature
Informal saving schemes, popularly known as stokvels or money clubs are generally viewed with suspicion by non-members as they are prone to conflicts, frauds and court battles after some members would have been accused of embezzling funds.
This tends to take much persuasion for one to join any self-help club.
The basic operations include members contributing to a central fund on a weekly, fortnightly or monthly basis. Most of the savings clubs comprise between 10 to 20 people who take turns to give each other a set sum of money.
Each member must ensure that they pay their contributions on time.
For instance, weekly contributions could be pegged at US$30 per individual which translates to US$120 per month and about US$1 440 per year. The funds are distributed regularly and individual beneficiaries spend the proceeds in a manner they see fit.
Money links are used to save for anything from funerals and groceries to holidays with younger savers increasingly clubbing together to invest in the stock market or to buy property.
Proceeds are usually shared in December. A big party is normally hosted by these members where guests buy food, beer and drinks.
December is traditionally associated with festivities, some taking stock and celebrating milestones achieved in the past eleven months.
As generally expected, the various milestones usually have a monetary tag, the higher the figure the greater the achievement. That higher figure is loosely equated to hard work all year round.
Socially, clubs provide a sense of community or moral support in tough times through regular in-person meetings.
However, over the years, money left, though still maintaining the basic concepts, have evolved in tandem with the economic situation.
For example, Bambanani Banking Club in Bulawayo which has been in existence for the past 20 years incorporated pooling resources to procure infrastructure assets.
“This year, the economic environment has been tough for our members but instead of folding up we reduced our subscriptions and came up with innovative strategies,” said Mrs Nothando Mpala, the current group’s secretary.
“Last year we came up with the idea of buying Jojo tanks (water storage tanks) for each member. To date, every member of Bambanani Banking Club has a Jojo tank. To us, this is a milestone achievement. It’s not easy to save individually to buy a Jojo tank.”
To insulate themselves from power outages, the focus now is on buying and installing solar systems.
“With frequent power cuts, we are into the procurement of solar panels. Each member should install a solar system in their household.
This is the kind of innovation we encourage each other to do,” she said.
Another innovation that leans towards bonding of members is that of embarking on holidays, benefits that go beyond pure finance.
“We identify a holiday destination to visit and make contributions and bookings in advance and benefit from discounts. So far, we have gone to Victoria Falls, Durban and Cape Town. We call it a Holiday Club group”.
The quest for “quality” education in private schools also has a component for Bambanani banking members.
“On school fees, our members have sent their children to private schools. We have contributions tailor-made to cater for that. Again, we value this initiative,” said Mrs Mpala.
“With frequent power cuts, we are into the procurement of solar panels. Each member should install a solar system in their household.
Big Sundays-Ezinkulu chair lady, Fiso Nkiwane said although 2022 posed a challenge for members, they managed to persevere and pull through.
“The year has been difficult to us to an extent that some members pulled out and some were defaulting. However, we managed to navigate and reduced subscriptions. For example, we had weekly contributions of US$200 and reduced it to US$100,” she said.
From the proceeds, some members have managed to build houses, buy cars and establish businesses.
“Over the years we have seen massive personal growth among our members. Livelihoods have been uplifted with some purchasing residential stands, building houses and cars. For us, money clubs are very helpful,” he said.
However, several members of different money schemes acknowledged the risks associated which called for the need for vigilance in recruiting members.
Stokvels rely heavily on personal relationships and the trust, responsibility and peer pressure they cultivate.
“To be honest, we met up with other members on various social media platforms and what brought us together is the need to save money for big projects,” said Sibusisiwe Gugu Moyo.
“We realized that individually, one could struggle and take a long time to achieve certain goals, but pooling resources with others is a fast route to achieve set targets.
Victoria falls
“So, money clubs are about trust and honesty among members. We do thorough vetting for all members and we require a copy of a national identification card and an affidavit from members.”
“Money clubs are of great help to most people. Families have been sustained, houses built and businesses set up. So, they are a good form of savings,” she added.
Mr Khumbulani Makhalima said some clubs deposit money into personal bank accounts normally of founding members and this can create problems over access to cash.
He explained that if the account holder dies, club members have to negotiate with the next of kin or the bank to access their funds, and they can be unsuccessful.