As the stokvel sector continues to move towards greater formalisation, more and more groups are making use of offerings from banks and other financial service providers because these are seen as ‘safe’ and a wise means of keeping their hard-earned cash secure. Those that continue to keep their cash in hand to avoid banking fee charges and have it easily accessible put themselves at greater risk for theft, loss and make it considerably more difficult to keep track of monies received and paid out.
Fortunately times are changing and while there will always be stokvels that exist for the primary reason of catering to their members’ basic needs such as groceries in December, there are an increasing number of stokvels that are realising that they can benefit from researching the financial products and services available to them, including a variety of investment options for more sophisticated stokvel groups that are keen to grow their wealth. Club savings accounts are the most common vehicle for managing stokvel money but these unfortunately do not offer much of a return in terms of interest earned because of increasing inflation. This month, we compare some of the standard savings accounts available from the main banks and explore some of the best ways for your stokvel to make use of what they are offering, as well as the issue of how to go about safe lending from within your stokvel.
Beating the Banking Blues – where to start? What to choose?
Let’s take a glance at what’s on offer from the different main financial institutions in order to understand the subtle differences:
These accounts of course, provide the basic means for stokvels to transact and safeguard their money. But as mentioned before, they do not offer much in the way of returns for stokvels to grow their money. We’ll take a look at some investment options for stokvel group accounts in future, this month we explore ‘safe lending’ in the context of stokvels.
Safe Lending – what is it and how to go about it?
There is an old saying that says: “Neither a borrower nor a lender be” – unfortunately if we all lived by this rule, most of modern society would crumble around us. Stokvels are commonly referred to as a type of peer-to-peer lending system. You put money in and are technically ‘lending’ it to your fellow members until it’s your turn to receive your lump sum payout. But it is also common practise for stokvels to lend money to individuals from time to time at significantly high interest rates, often between 20% and 50% per month. This can pose an extreme risk because of the possibility of non-payment. So how can safe lending within your stokvel take place?
If your stokvel group is in the habit of lending money to members, make sure you have these elements in place to help protect against loss through non-payment. The traditional stokvel system has worked well for centuries but with the rise of modern technology, it is now possible for it to work even better and as such, provide greater economic empowerment to more people who need it most!