Stokvels have long been a part of South Africa’s financial culture, helping communities pool
resources, save for big expenses, and support one another in times of need. A stokvel, when
managed well, can be a powerful tool for financial empowerment and building wealth within a group.
However, as with any financial structure, stokvels are not without risks—particularly as scams targeting stokvel groups have become more common in recent years.
Here’s how to make the most of stokvels while staying alert to potential fraud. Stokvels are popular because they promote collective saving and offer a way for members to reach financial goals they might not be able to achieve alone. From buying groceries and covering school fees to setting up for the holidays, Stokvels have helped millions achieve financial stability. With group contributions, Stokvel
members often earn more from collective interest, and they benefit from shared financial responsibility and discipline. The power of a stokvel lies in its ability to unite individuals with similar goals, create a safety net, and encourage savings in a world that can sometimes feel financially overwhelming. However, a few simple guidelines can help ensure that this financial community remains safe and productive.
With stokvels handling large sums of money, they’ve become a target for fraudsters.
Here are some key warning signs of a stokvels scam
Promises of Unreasonably High Returns: Steer clear of stokvels that make unrealistically high return
promises. Scammers may promise doubling or even tripling your contributions in a short period, which is not sustainable or typical for legitimate stokvels.
- In order to receive their payouts, members of legitimate stokvels are not required to bring in additional members, as is the case with pyramid schemes. Genuine stokvels operate based on member contributions, not recruitment.
- Lack of Transparency: Scammers frequently decline to give incomplete information about the location of the funds, their management, or the people who have access to them.
- No Clear Agreement or Constitution: Every stokvel should have a written agreement or constitution that outlines the group’s rules, contributions, and payout structure. If there’s no documentation, that’s a major red flag.
- Cash-Only Contributions: Members should be concerned if they are only asked to pay in cash or send money to a single individual. A well-run stokvel often has a bank account, ensuring funds are secure and monitored.
Tips for creating a successful, secure Stokvel
Creating a stokvel with clear rules and strong management can be rewarding and beneficial for everyone involved. Here’s how to keep your stokvel safe and productive:
- Set Up a Group Constitution: This is essentially the rulebook for your stokvel. It should outline the group’s goals, monthly contributions, how often payouts occur, and who manages the money. This will ensure transparency and build trust among members.
- Elect Reliable Leadership: Choose a chairperson, treasurer, and secretary. These leaders should be trustworthy and committed to maintaining the group’s finances responsibly. Rotation of these roles can also help maintain fairness.
- Open a Dedicated Bank Account: If possible, open a stokvel bank account in the group’s name rather than managing funds through personal accounts. This ensures everyone can track deposits and withdrawals and minimizes the risk of funds disappearing.
- Have Regular Meetings and Updates: Monthly meetings are key to a successful schedule. They allow members to ask questions, discuss the group’s finances, and address any concerns early on.
- Get Support from Reputable Sources: Organisations like the National Stokvel Association of South Africa (NASASA) provide resources and support for stokvels. NASASA can also offer advice on setting up a stokvel and staying compliant with regulations.
If you suspect a scam or need advice on running a stokvel, reach out to your nearest Consumer Protection
Office. These organisations can guide you on legal matters and help you protect your stokvel group from
potential risks. Remember, you’re not alone—resources are available to help you safeguard your financial goals.
Read more about what is in this issue 8 Diamond magazine
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