Financial services need to understand stokvels better in order to be of value to this type of market.
This is according to African Response Managing Director Mamapudi Nkgadima, who spoke to Gugs Mhlungu on #NightTalk's weekly Money Matters feature.
If you think about how long the stokvel phenomena has been talked about, when you look at the financial services the behaviour is almost like to say 'how much can I capture this market', 'what share of this market can I get', instead of saying, 'let me understanding this phenomena in stokvels' and 'let me try and do things better for stokvels'— Mamapudi Nkgadima, Managing Director at African Response
According to Nkgadima, financial services approach stokvels more with the aim of taking over the stokvel market, instead of helping to strengthen and develop it.
She says that the products that are currently coming into stokvels are mostly to satisfy what financial services are doing.
If we are going to encourage stokvel groups to save through other avenues or mechanisms, there's also got to be a lot of education and there's got to be a lot of flexibility to try and accommodate the modus operandi of what stokvels do and how stokvels do things— Mamapudi Nkgadima, Managing Director at African Response
Nkgadima says that there is potential for people to grow the money they invest in stokvels through financial literacy.
She also says that there needs to be flexibility in formal financial structures in the country to accommodate the aims of stokvels and how this market operates.
How can we tap into stokvels towards saving into education instead of saving towards a consumption?— Mamapudi Nkgadima, Managing Director at African Response
According to Nkgadima, there are about 13 million people in South Africa who are part of stokvels, a 25 billion rand sector.
Nkgadima says that the financial impact of investing in stokvels can be more impactful on the individual if it is invested more into education rather than on consumption.
Listen to the conversation below: