What should I look for in a well-run stokvel?

If you’re interested in joining a stokvel or establishing a new one, you need to know how stokvels operate within South Africa’s financial system and any protections the law offers them.

To operate effectively, a stokvel needs the following :

• A group of members with a common purpose, committed to meeting regularly and contributing to a savings pool (see “What are stokvels and how safe are they?” for more on different types of stokvels);
  
  
• Elected officials, including a chairperson, who chairs the meetings; a treasurer, who handles the money and keeps a record of transactions; and a secretary, who takes minutes in meetings and does other necessary administrative work. In a small scheme, these functions may be combined.
  
  
• A constitution that sets out the rules of the scheme; and
  
  
• A bank account.

Stokvels that hold more than R100 000 are required to be registered with the National Stokvel Association of South Africa (Nasasa). Nasasa-registered schemes are exempt from the Banking Act, which applies to deposit-taking institutions, and provisions of the National Credit Act that apply to credit agreements.

What should the constitution contain?

This is the founding document of the scheme and forms a legal contract to which members are bound. A stokvel doesn’t have to have a written constitution, but it should have one if it has assets of more than R100 000 and is required to be registered with Nasasa. It should include:

• The objective/s of the scheme;
  
  
• How regularly the group meets;
  
  
• How much people should contribute to the savings scheme and how often;
  
  
• The conditions under which members receive payments or distributions;
  
  
• The terms of borrowing money from the scheme, if applicable;
  
  
• How the money is invested;
  
  
• What happens if a member leaves the group or dies; and
  
  
• What happens in the case of a dispute if, say, a member owes the stokvel money.

The constitution may also outline the duties of the chairperson, secretary and treasurer, and have rules for voting on resolutions.

Nasasa has a template for a stokvel constitution on its website (https://nasasa.co.za), which can be adapted to a stokvel’s specific requirements.

How do stokvel bank accounts work?

The major banks have special accounts for stokvels or savings clubs. They generally work as follows:

• The account is in the name of the stokvel. It may not be a requirement that the stokvel is registered with Nasasa, but it is recommended.
  
  
• Fees are low. Most banks do not charge a monthly account fee. Transactions done at a branch incur a cost but electronic transactions may be free.
  
  
• The account attracts interest. Rates differ, and may depend on how much is in the account, but they are generally higher than rates on personaI transaction accounts.
  
  
• The account must be opened by at least two, in some cases three, signatory members, who may all need to be present to open the account, and may be required to have personal accounts at the bank. The signatories must provide a list of stokvel members.
  
  
• Non-signatory members of the stokvel should also have personal bank accounts into which payments can be made, though not necessarily with the same bank.
  
  
• Stokvel members must comply with the Financial Intelligence Centre Act requirements regarding identification and proof of address. Any changes to these details must be immediately reported to the bank.
  
  
• Withdrawals require authorisation by two or more signatories. Some banks require a notice period for withdrawals.
  
  
• Members have access to the account statements.
  
  
• There may be benefits for members, such as rewards and special deals on products such as funeral policies.

What happens when there’s a dispute?

A stokvel is not a legal entity in the way that a company is, and cannot exist separately from its members. Assets and liabilities are shared equally by members.

There are no laws specifically governing the operation of stokvels. This means the rules of the stokvel need to provide for the way disputes are handled. For example, the rules should outline the process to be followed if a member owes the stokvel money.

Because stokvels are traditionally built on mutual support, the group will normally try to help a member who is struggling financially and make it easy for the member to repay the debt.

In more serious matters, the members of the stokvel can collectively sue on behalf of the group for any monies owing to it or for breach of contract.

The mismanagement of funds will normally be dealt with internally. However, in cases of theft or fraud, where a crime has been committed, it should be reported to the South African Police Service. The stokvel may also turn to Nasasa for assistance.

What is Nasasa?

Nasasa is a self-regulatory organisation authorised by the South African Reserve Bank in terms of Government Notice 404 in the Government Gazette (May 2012).

Founded in 1988 by its current chairman Andrew Lukhile, it represents stokvels in the public and private sectors, promoting their interests, providing support and training, and arranging deals with suppliers. Among other things, Nasasa is committed to upholding and developing the standards of the stokvel practice in South Africa and facilitating stokvels’ participation in the mainstream economy.

To register a stokvel with Nasasa, you need to complete and submit the member application form on its website. Membership is free.

Stokvel apps

Many stokvels now operate online and make use of social media and apps. But fraudsters love to use these platforms to entice people to invest in scams masquerading as stokvels.

At least one South African fintech company has attempted to provide a legitimate and credible platform for stokvels. Stokfella is a licensed financial services provider that offers the Stokfella app to assist stokvels to manage their finances digitally. It also provides opportunities for investment.

Launched in 2016, it offers stokvels an easy way to do their administration and improve information flow among members. The platform acts as a conduit for contributions, which are directed into a financial product, platform or service provider selected by the stokvel.

People wanting to create investment-based stokvels can post them on the site and invite like-minded groups or individuals to join their ventures.

Stokfella also assists people who want to start community-based initiatives by helping to structure governance measures that safeguard members.