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eStokvel turns stokvels into business entities

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 30 Nov 2015
The eStokvel program transforms stokvels into investment clubs while managing financial risk, says Decorum's Caskey Ndaba.
The eStokvel program transforms stokvels into investment clubs while managing financial risk, says Decorum's Caskey Ndaba.

Decorum, a financial services business, has recently introduced eStokvel, a technology-driven program that helps stokvels structure and formalise themselves into viable business entities that grow beyond saving funds.

Stokvels are still a popular way of saving for many South Africans. The eStokvel progarm allows members to put money aside for investment while creating wealth and generating a profit, instead of merely saving up for funerals and year-end groceries, says Decorum.

The eStokvel program enables the members and the stokvel itself to tap into mainstream business and markets through formalised business models. This lets them run successful businesses which create tangible business opportunities for start-ups and SMEs, says Caskey Ndaba, CEO of Decorum.

"Apart from merely handing them the program, Decorum will assist stokvels to be serious players in the financial services space, especially in insurance and banking. The different clubs will be taken through a process of being registered financial services providers with a FSP licence issued by the Financial Services Board," says Ndaba.

The company will then provide stokvels with professional support by administering their affairs in a business-like manner, helping them keep records for ongoing usage and enabling them to position themselves as investment clubs that see decent financial yields on their investments, he continues.

This will then allow stokvels to see value of being underwritten and get to share in the profits of the premiums they are paying to an underwriter, he notes.

According to the National Stokvel Association of South Africa (NASASA), there are over 11.4 million individual stokvel members, belonging to over 811 000 groups. Collectively, stokvels are said to contribute about R44 billion to the national economy annually. Groups such as burial societies may have 50 members, while investment and grocery groups tend to have between 10 and 20 members.

"The Decorum stokvel program is able to transform stokvels into successful investment clubs with businesses that have full support and guidance on how to manage financial risk, invest their finances, pursue viable business opportunities and grow their investments to become a wealth that will linger and be transferred from generation to generation for the better state of our country," adds Ndaba.

He notes South Africans have the ability to gather and accumulate wealth with possibilities of creating jobs to eradicate poverty and empower each other as a unit and as defined communities without having to rely on the government and banks for grants and funding.

Traditionally, a stokvel involves members of a particular society contributing an equal amount every month or every few months with a payout of the monthly collective savings either to one member or all members dividing it among themselves at the end of each year.

In a new era, banks have also jumped on the bandwagon to take advantage of the stokvel market by offering banking solutions that cater for various types of stokvels.

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