The informal savings market has a strong tradition and history of creating a much-needed alternative medium for encouraging savings amongst disadvantaged communities.
South Africa enjoys a relatively advanced and modern financial system and other progressive financial services. These services have been inaccessible to many consumers, small-scale investors and large segments of a community that have historically been excluded from participating in the formal financial markets.
Stokvels and burial societies throughout the country were formed, with the view of creating an alternative to banks or savings mediums.
In a survey done - only 38% of the poor households surveyed, use formal, long-term savings instruments such as retirement annuities, 67% belonged to at least one stokvel and burial society.
Both government and the financial sector have identified the need for more vigorous money management and keeping track of credit within this arena. Taking credit so you can live is a problem, but having access to a basic banking account provides some discipline in money management. Stokvels are seen as savings for a specific item, event or emergencies.
This sector of the market has an estimated value of R12 billion rand per annum and is certainly a growing trend.
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