The power of stokvels - moving from passive to active capitalism

Most South Africans are aware of stokvels. Members are often women who contribute a small amount of money each month. If it is a monthly setup, the accumulated amount is given by the club to one or other member in turn. If it is an annual setup, then it is more of a savings scheme whereby members at the end of the year, receive a lump sum in accordance to the total amount they paid in over the year in small amounts. 

Among poorer South Africans it is often the primary means of saving and the 11 million people who are members own assets worth R44b per year. An estimated 61% of black South African households participate in the schemes. (

Rudzani Mulaudzi of the Graduate School of Business, University of Cape Town, notes most stokvels are simple savings clubs because members are unaware of other options. Stokvels can be much more profitable and spur economic growth in ways not currently happening. (

Instead of having accounts that grow, most funds today sit in low-interest accounts. When the funds are spent, they are often spent on consumer goods instead of ways that would generate further income. In most cases, the savings are lent out by the banks holding the accounts and the banks benefit, but stokvel participants see little of it. The Sowetan reports, "Only one in three stokvel members belong to an investment club, the survey found. Contributions to investment clubs usually take place monthly and the capital raised is used to fund an investment held over a longer period and which potentially earns members inflation-beating returns."

Stokvels need to rethink matters, they need to move from passive capitalism to active capitalism. Instead of merely saving money, they should move to investing it. It will benefit them and their members, and benefit the wider economy. 

Mulaudzi acknowledges "transitioning from consumers to investors may not be easy for stokvel members, [but] it is important that they begin to recognise their ability to leverage their collective strength to secure the advantages of being one of the biggest buyers in the economy."
In Kenya, a similar idea was put in place by the Murang’a County Women SACCO, a savings co-operative credit organisation. It is larger than most stokvels and has 25,000 members, most of whom can afford very little in the way of contributions. (

In this case the co-operative thought big. They pooled their money, bought land and built a hostel for students from the Murang'a University College nearby. A local Kenyan paper said the project is expected to “start making millions in rent” yearly. Rose Wathigo, chair of the MCWS says they changed course, "After we realized the magnitude of the housing problem in the country, we decided to invest in student hostels."

Stokvel member Grace Ndegwa, who lost her husband and is raising her two teenage sons, says this new version of a stokvel is a life-changer for her: "This building has created many opportunities for me. I will now be in a position to improve my credit worthiness and be able to access bigger loans from banks or SACCOs, which will help me invest into other income-generating ventures."

Her attitude shows the shift from passive to active capitalism. Instead of reaping small interest from savings, she is looking toward larger investment returns. Margaret Wanjiku said, "The SACCO is helping us achieve what we could not have managed individually."

Many forget capitalism is not just lone entrepreneurs forging new paths but also the financial cooperation of individuals doing collectively what each is unable to do alone. It is voluntary - not forced; personal - not political. Every investor in the stock market is doing pretty much the same thing. 

Another example of collective private capitalism came from the Eastern Band of Cherokee Indians in North Carolina. Many North American tribes have found it lucrative to open casinos, which can operate on tribal land in ways they cannot in the over-regulated markets under state control. (

In this case, tribal authorities did something new - each tribal member would hold a share in the casino and profits would be split amongst them. Instead of being owned by the tribal government, it was owned by the tribal members.

The first payout of profits was just $595 but with each year they grew. In 2016 every tribal member received $12,000 as their share. 

As for the children of the tribe, income is invested and put into trust accounts for them, which they can access when they become adults. In the case of Spencer McCoy, his "minors fund" came to $105,000 after taxes and estimates his younger sister will receive about twice that when she reaches adulthood. 

Half the funds from the casino go to per capita payments and the other half pays for health care for all tribal members, paves roads and funded the building of the new water treatment plant. 

The infusion of income from the collectively owned private casino spurred a dramatic decline in behavioral problems among younger tribal members and reduced drug and alcohol use as well. Crime was reduced and kids stayed in school longer. As for labour participation rates, there was no decline, people still sought out work at the same rates as before. 

The women of the Murang'a County prove one does not have to start out wealthy in order to make money - active capitalism works for the owners, whether there is just one owner or many. Collective ownership is not collectivism. When privately done, collective ownership can be beneficial not just for the economic development of the entire region, but also for each of the many, individual owners.

This article was first published on City Press on 9 October 2020
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