Advertise with

A total of R44 billion is collectively saved in 820 000 stokvels in South Africa annually.
A total of R44 billion is collectively saved in 820 000 stokvels in South Africa annually.

SA stokvels collectively save R44bn annually


By Sizwe Dlamini - Jun 11th, 16:04

A total of R44 billion is collectively saved in 820 000 stokvels in South Africa annually, with more than 11 million South Africans being members of stokvels, according to Nedbank research. 

The bank stated that if harnessed correctly, stokvel’s could be the driver that South Africa needs to significantly enhance discretionary savings levels to bolster the economy.

A stokvel is a savings group to which members regularly contribute an agreed amount. The group then decides on how that money is shared, whether it is a monthly pay-out or invested and shared at the end of the year.

According to the National Stokvel Association of South Africa, the stokvel market was worth more than some of South Africa’s largest businesses. By geographic spread, provinces where the country’s top savers reside, Gauteng was the top-ranked followed closely by Limpopo. Together with North West and KwaZulu-Natal, these four provinces accounted for 70 percent of the stokvels in the country.

Data from research conducted by Nedbank indicated that the most popular types of stokvels are savings stokvels, grocery stokvels, and burial societies. “Two-thirds of grocery stokvels make bulk purchases from various retailers and wholesalers once a year in quarter four.”

According to market research company African Response, 41 percent of the stokvels are banked and this served to bring more South Africans into the formal financial services sector by giving them access to other savings, investment and protection offerings.

Nedbank’s head of retail investments Sisandile Cikido said that only 5 percent of stokvels were focused on investment savings, which meant South Africa had the lowest savings rate among G20 countries. “Of those that do save, 40 percent have their money invested in low- or no-interest accounts. To help the country and its citizens achieve their economic goals, a smarter savings culture driven by accessible products has to be built.”

Cikido said: “We believe that by helping stokvel members to use their existing savings to grow more wealth, we can make a real contribution to changing the face of the economy and building broad-based wealth. Making the banking system truly inclusive does not only benefit individuals but also strengthens the economy as a whole.”

Asked about how tax affected stokvels Cikido told Business Report that stokvels were rarely taxed due to the tax exemption on interest earned which is R23 800 for individuals under 65 and 34 500 for individuals older than 65.

“This means each stokvel member would need to have earned interest exceeding this amount from annual contributions in order to be taxed. Nedbank doesn’t currently have a stokvel account earning this type of interest at an individual level."

“For example, if 10 stokvel members contribute R500 each every month, the interest earned per annum will be R 2 370 by the stokvel and R237 per member, which is below the tax threshold. However to comply with tax laws, Nedbank issues a tax certificate indicating interest earned annually to the stokvel secretary,”she said.

Cikido said should a stokvel choose to invest for a longer term, with higher risk and interest potential capital gains taxed would be charged per member ranging from 18 percent to 38 percent depending on the individuals' marginal rate.IOL 

Related News

How to attract and retain the best employees
14/10/2019 - 11:15
Finding the right employee can be a time-consuming process – especially when you’re looking to hire the best candidate for the job. But there are simple steps one can take to find employees who are best suited for your culture and the future success of your business.

Securing your brand is a C-suite challenge
11/10/2019 - 14:37
Brand value is a key component of a company’s success and it takes several years to establish by implementing a brand strategy that supports the business. However, in today’s digital environment, brand value can be compromised in a matter of minutes and negatively affect the brand and company. As such, brand security is an issue that needs constant attention to minimise possible reputational damage to the brand and the associated risk of losing customers.

SA economy at risk of third-quarter contraction
11/10/2019 - 09:54
Dismal mining and manufacturing figures for August have raised the prospect of a third-quarter economic contraction.

Understanding workforce management in security
10/10/2019 - 15:08
In an increasingly connected business environment, decision-makers need to more effectively leverage the human resources they have at their disposal. According to dormakaba South Africa, this is where a good workforce management system that can manage personnel as a strategic asset becomes imperative.

Temporary employment services offer a dynamic staffing solution to help the retail sector cater for the seasonal peak
10/10/2019 - 14:56
As we head into the final stretch of the year it is time to start gearing up for the added demands of the summer season. From factories and warehouses to retail outlets, the entire retail chain is under added pressure during this seasonal time of high demand. Temporary employment services (TES) can help all areas of the retail sector to cater to this peak with additional and flexi staff exactly when and where they are needed, with the right skills for the job, and none of the administrative headache of hiring permanent or contract staff.