Stokvels: an opportunity for development at family, community and national level or not?
This information is based on https://personal.nedbank.co.za/learn/blog/stokvel-options.html.
In many South African communities, stokvels are more than just savings clubs. They allow people to achieve financial and resource freedom while pursuing goals that would be difficult to reach alone. Friends, family, and neighbours contribute money to a shared fund, creating systems of mutual support that strengthen social cohesion and improve financial resilience. Stokvels operate on trust, reciprocity, and the understanding that the wellbeing of one is connected to the wellbeing of all. Stokvels are rooted in the spirit of Ubuntu – “I am because we are”, “not I am because you are” or “I am, and you are.”
What are stokvels?
Stokvels exist across Africa under different names, reflecting local languages. Despite the different names, esusu (Nigeria), ajo (Nigeria), susu (Ghana), tontine (West African Francophone countries), merry-go-round (Kenya, East Africa), chama (Kenya, Uganda), kweterana (Uganda), nigina (Uganda), mukando (Zimbabwe), sanduk (Sudan) or poundo/club (Botswana), these systems work in similar ways, relying on reciprocity, collective responsibility, and shared financial growth and independence.
Types of stokvels
Stokvels take many forms, each serving different purposes.
- Savings stokvels are the most common. Members contribute a fixed amount monthly, and each member takes turns receiving the total pot. This provides members with money at regular intervals to cover household expenses, emergency costs, or personal needs.
- Investment stokvels allow communities to pool money to buy property, invest in stocks, or fund other projects. Groups gain access to opportunities that would be difficult for individuals to afford on their own.
- Credit stokvels where members pool resources together then borrow is lend to members of the public the pool on interest
- Burial societies help families manage funeral costs. Members contribute regularly, and clear agreements about beneficiaries prevent disputes and give reassurance during difficult times.
- Education-focused stokvels cover school fees, textbooks, and other educational expenses. Business-oriented stokvels provide start-up capital for small enterprises, fund expansions, or allow members to purchase property for rental income. Over time, these efforts improve livelihoods and create jobs.
- Special purpose stokvels are organised around weddings, festivals, or seasonal needs. These demonstrate the flexibility of stokvels in meeting social and cultural obligations.
- Production and value addition stokvels where individuals get resources from the pool to make goods or add value or members produce the goods cooperatively and sell them.
Running a stokvel without a bank
Many stokvels operate without formal banking. Contributions are collected and managed by a trusted treasurer or rotated among members. Written records of contributions, payouts, and member participation are essential. Regular meetings help maintain accountability and prevent misunderstandings or misuse of funds. Informal stokvels succeed when members communicate openly and follow clear rules. Trust and transparency are more important than access to a formal bank account.
The community impact of stokvels
Stokvels strengthen social bonds and provide support for the most vulnerable. They circulate funds within local communities, support small businesses, and encourage entrepreneurship. They also contribute to national economic growth and social development. These savings groups support education, reduce poverty, and promote economic inclusion. They show that communities can organise their own solutions to financial and social challenges using familiar and trusted practices.
Protecting against scams
Stokvels are not without risks. Scams exist, and members need to ensure legitimacy, demand transparency, and keep accurate records. Unrealistic promises of high returns should be treated with caution, as is common in pyramid schemes and loan sharking. Development workers and community organisers can help educate communities about these risks and support secure practices.
Case studies
These case studies are made up for the purposes of learning.
Case Study 1: Izizwe Savings Group (Klipfontein, Western Cape)
Name: Izizwe Savings Group
Location: Klipfontein township, Western Cape
Founded when: March 2016
Why: A group of neighbours wanted a predictable way to cover school fees and emergency clinic bills without turning to informal loan sharks
Number of members: 34 regular members (household representatives)
Leadership: Three elected office-bearers — chairperson (rotating elder), secretary (younger member who keeps minutes) and treasurer (trusted long-term resident); a three-person audits panel chosen annually from members
Type of stokvel: Mixed savings and education stokvel (monthly pot rotated to a member; a separate education reserve from agreed extra contributions)
Successes: Regular payouts helped 12 children remain in school during fee hikes; the group set up a small bulk-buying arrangement for school uniforms, saving members about 20% on costs; social capital increased — members organised childcare swaps and labour help during illness
Challenges: Keeping up with irregular contributions during seasonal unemployment; occasional disputes over payout order (resolved through the audits panel); lack of formal banking meant cash-handling risk until they opened a communal account with two signatories in 2019
Case Study 2: Amandla Women’s Burial Society (Kgokgole, Limpopo)
Name: Amandla Women’s Burial Society
Location: Kgokgole village, Limpopo Province
Founded when: August 2008
Why: Women in the village wanted to avoid crippling funeral costs and to ensure dignified burials for members’ families
Number of members: 78 active female members, plus an extended beneficiaries list of 200 dependants
Leadership: A committee of five women elected for two-year terms (chair, treasurer, records keeper, outreach co-ordinator, dispute mediator); leadership rotates to include younger women for succession
Type of stokvel: Burial society (regular contributions, emergency advance fund, negotiated group funeral rates with local undertaker)
Successes: Negotiated reduced funeral-cost packages with local funeral providers; paid out promptly for 16 funerals without causing hardship to other members; set up a small communal food garden whose proceeds cover administrative costs
Challenges: A few instances where non-members claimed benefits at funerals led to tension; record losses after heavy rains exposed poor storage of papers — prompted digitised basic records kept by the records keeper; the society struggled with transparency perception until they introduced quarterly open-book meetings
Case Study 3: Themba Youth Investment Circle (Eastern Seaboard, KwaZulu-Natal)
Name: Themba Youth Investment Circle
Location: Coastal town on the eastern seaboard, KwaZulu-Natal
Founded when: January 2020
Why: Young workers and informal traders wanted a vehicle to save for small business capital and to learn basic investment skills together
Number of members: 22 active contributors (age range 19–35)
Leadership: Youth collective with non-hierarchical facilitation; a small admin team (two volunteers) handle records and liaison with local microfinance mentors
Type of stokvel: Investment stokvel / business capital (quarterly pooled investments; member-led micro-grants for vetted start-ups)
Successes: Funded five micro-enterprises (street food stalls, a sewing micro-enterprise, a bicycle repair cooperative) that created paid work for members; held regular peer learning sessions with a local development NGO on basic bookkeeping; several members used pooled savings to access a municipal youth grant
Challenges: Risk tolerance of youth members sometimes clashed with older partners (pressure to withdraw early); marketing the collective to cautious neighbours required evidence of returns; lack of formal contracts for micro-grants led to two businesses failing and needing mediation
Case Study 4: Mpho Food Cooperative Stokvel (Soweto, Gauteng)
Name: Mpho Food Cooperative Stokvel
Location: Soweto, Gauteng
Founded when: June 2014
Why: Local food vendors wanted to reduce buying costs through bulk purchases and to stabilise income during trading slow periods
Number of members: 46 market vendors and small shop owners
Leadership: Elected committee: chair, deputy, procurement officer, treasurer, and two logistics volunteers; procurement officer runs weekly bulk orders
Type of stokvel: Business / bulk-buying stokvel (savings used for joint wholesale purchases and a rotating working capital pot)
Successes: Reduced cost of staple goods by bulk buying (average 18% saving); established a shared cold storage arrangement to limit waste; members pooled a holiday pot to provide support to vendors during COVID trading disruptions
Challenges: Storage and distribution logistics — spoilage risk until a rented refrigerated container was secured; occasional non-attendance at procurement meetings delayed orders; informal credit extended to struggling members increased the risk of arrears
Case Study 5: Kganya Rural Housing Stokvel (Eastern Free State)
Name: Kganya Rural Housing Stokvel
Location: Small farming community, Eastern Free State
Founded when: October 2012
Why: Households sought a planned way to make down-payments for small housing plots and to organise collective labour and materials purchases
Number of members: 56 households (extended families often represented by one member)
Leadership: Village assembly chooses a five-member committee, with two elders serving as advisers; a construction subcommittee manages materials and labour rosters
Type of stokvel: Investment / housing stokvel (savings earmarked for land deposits and collective procurement of building materials)
Successes: Enabled 18 families to complete basic housing upgrades through pooled deposits and shared skilled labour rosters; negotiated discounts with local suppliers for bulk materials; strengthened communal labour systems (mutual aid for construction)
Challenges: Land tenure uncertainty slowed formal registration of some plots; long timing for construction meant some members grew impatient and requested early payouts; seasonal cash flow pressures from agricultural cycles required flexible contribution schedules
Lessons for development workers
Stokvels highlight the value of local, community-driven solutions. They demonstrate how collective action can generate social, economic, and cultural benefits. Trust, accountability, and shared responsibility are key to success. Understanding stokvels can help development workers support local economies, advance education, reduce inequality, and strengthen community resilience. key issues are:
- Link stokvels with the formal banking system, where possible.
- Connect objectives with development plans at family, local community and national levels.
- Emphasise the values of Ubuntu.
- Prevent scams and financial loss.
- Build the capacity of leaders and practitioners to administer stokvels.
- Research and create evidence around, and about them.
- For education and learning, visit stokvels, invite stokvel leaders/members as guest lecturers and place students for fieldwork.
- In most cases stokvels focus on trading or retailing already producing goods, which increases consumption not production, thereby, does not grow the local economy. It is crucial to focus more on production of goods based on local resources, as well as value addition.
- At times the goal of saving is not achieved because each member still has to pay each one in turn, the solution is to invest the savings to get a profit. The role of practitioners in this case is to ensure resources are pooled together and that the pooled resources are invested securely.
- Important for practitioners to distinguish community led and corporate led stokvels.
Conclusion
Stokvels are more than financial tools. They provide mutual aid and support community transformation. Across Africa, whether called chama, mukando, sanduk, kweterana, nigina, or poundo, these savings clubs show that communities working together can achieve far more than individuals alone. Stokvels demonstrate how cooperative systems improve lives, strengthen communities, and contribute to sustainable development.
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