R 12 Billion per annum market, millions of potential clients, everyone wants a peice of it, but no one is prepared to do the dirty work...

As a promise I intend keeping, from my previous article "From Stokvels to Stock Markets" I promised to share so some of the insight I have been exposing my self to regarding these market. And even in Today's article you won't stop falling over your granny's chair as I share some of the lighting and most fascinating facts about this market.

Like the title of my article indicates "No one wants to do the dirty work". And with this phrase I don't intend to point a finger or act as if I'm better than anyone. But sincerely speaking, as I dig deeper into the dark truths and speaking to the relevant people. I realise that it has been some decades now, and everyone has been standing at the site, but no one willing to start digging and even those few who had the little courage to do so never got anywhere because the digging was done in doubt on whether there is really treasure there, and secondly without doing proper architectural work before the mining starts. In that sense, the dark pit was bound to fall on them eventually, and because of the fear and non commitment no one has succeeded so far...

If you are a bit confused about what Am I going on about, read my previous article and you will be in-tune.

Here are some more facts found about this market that I have recently found:

- According to Old Mutual, what is called grey money, which is money circulating outside the formal market has grown to be a R 33 billion industry in about a decade.

- It is said one in three black people belongs to a Stokvel in one way or another

- The main reason why Stokvels were started back in about a century ago was because of lack of access to banking services by poor people in the rural areas, and even after some emigration took place when people left their home lands to work in the cities, the culture of group saving remained intact because they found out that the banks were not as accommodative.

- Amongst the big four banks (ABSA, Standard bank, Nedbank and FNB) no bank can claim a significant stake in the 12 billion industry. This is because these banks have been trying to develop relevant products for the market, but have been missing some few small and what would seem insignificant characters of the market. The most evident being the social capital, and obviously the interest rates that seem ridiculous to a Stokvel member who is used to either 0% or an insignificant percentage on her/ his borrowings from the group compared to around 10 to 25% and above on banking products.

- The Stokvel culture is not about to cease existence even as black people move into the middle class, and certainly because the social economic barriers are still very much evident, as governmental economic empowerment initiatives are only able to reach the few elites and not to the lay man on the street who is likely to be a member of a Stokvel.

- There are high profile Stokvels that contribute R 200 and 20 000 per month. This was observed by a Pretoria University professor who did a research on why do Stokvels still exist in urban areas with most sophisticated individuals who perhaps even receive preferential treatment from bankers.

I think I have said a mouthful for now, but in my next article I will share some more facts about the Stokvel market, what keeps them together and the activities involved...

There's more where that came from, keep in touch...

Andile Fulane

Founder: Empowered Vision

"Economical freedom through Financial education and Entrepreneurship"

Mobile: 084 770 92 70

email: empoweredvizion@gmail.com

From Stokvels to Stock Markets

I have been on a journey trying to find ways of touching millions of South African lives by empowering them in Financial skills and encouraging enrepreneurship. This dream is closely coming to reality by day as I dig deeper and trying to understand the South African market.This is a first of the many articles I will share with you as I mine for gold in neglected lands...

What you didnt know about the "poor savings schemes" in the townships!

• Size of market relative to whole population estimate; According to the UCT Uniliver study on the stokvel market, about 2.5 million people belonged to a stokvel excluding burial societies, which then represented 9% of the whole population. And one in every two black people belonged to a stokvel.
• Size of market in value: The same report indicated that an estimate of R 12 billion is invested in Stokvels p.a. Further studies by the Old Mutual Group revealed that grey money (which is money held outside the formal financial institutions) had grown to 33 billion over the past decade and the majority of it was held by Stokvels.
• Social and network economical vehicle evident in all LSM groups (LSM 1 – 10); with mid segments LSM 5,6 and 7 (17%, 16 and 14% respectively) with highest claimed membership. And the two extreme segments 1 and 10 with least claimed membership, 7% and 3% respectively. This is according to a report prepared by Fin Mark Trust – Stokvels in SA (2002)
• The need is evident and quantifiable; The report (Fin Mark Trust – Stokvels in SA; 2002) also states that around 41% of the Stokvel members are un-banked.
  Further to that; according to the Stokvel Company which has 9500 Stokvels consisting of 430 000 individual members, more than 70% of Stokvels review their savings account/ investment portfolio only once a year.With the assumption that the level of formal education has an impact on one's financial literacy levels, only 6% of the Stokvel market members have either a diploma or degree. With 38% having reached a high school level, but only 19% matriculated.
• They are already organised; which makes it easy to access, influence and keep the motivation alive amongst them.
• They are consistent and have a long life span in their nature; and because of that they serve as an excellent vehicle to nurture growth and monitor progress and to evaluate the outcome of recommended programmes continuously so as to amend them accordingly. This approach can also provide an opportunity to have access to a group of people whom you can study behavioural trends and make informed conclusions.
• Wild fire spread of influence; Stokvel members are part of house holds and communities, and whichever skill that has value in their lives will certainly have a room in their homes and conversations with friends. Stokvel members usually don't sign any contracts as a commitment to the group, but trust has remained a loyalty knot that binds all the members to honour their bargain of the agreement and therefore this reflects how much influence will it have, because it will become not only something that they believe in, but it will become part of the culture as much as Stokvels have become part of the township culture.
• The hunger to learn, save and participate in the financial markets is already there; A typical example will be the reception that the NEF Asonge share scheme received when it was launched specifically to empower black communities and to encourage savings amongst them. The shares offered were over subscribed by 13%. It is recorded that around 10 000 groups and 150 000 individuals were consulted through the mobile one on one sessions done to promote the initiative.
  

I hope from now you wont take the tea lady lightly, or the man in blue overall suits that you constantly see in early hours when you are rushing for your executive meeting... There is power in the collectives, people are more than eager to learn and they are not as ignorant as we assumed..!

Until the next article...

Yours in Economical Freedom through Financail Education and Entrepreneurship,

Andile Fulane

CEO Empowered Vision
email: empoweredvizion@gmail.com
Cell: 084 770 9270