Stokvels

This is a very intriguing form of fund raising practiced in South Africa.

It dates back to the rotating cattle auctions of English settlers in the Eastern Cape in the 19 century and is derived from the Afrikaans for "Stock Auction" or "stok veiling"

12 or more invited participants contribute regularly based on a constitution.

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These are similar to the Self Help Groups of India but could be even more widespread.

It is estimated that one in every two black adult South Africans is a member of at least one of 800 000 stokvels. Black adult South Africans invest approximately R50 billion in stokvels a year.

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The most common of these that I have observed when growing up is the Contribution Stokvels.

Everybody would contribute a fixed amount of money at a predefined interval and each gets a turn to receive the lump sum. The money can then be used for any purpose.

Others are used simply for savings for a time of need and still others are used for specific purposes or big ticket items.

It's really just up to what the members decide when drawing up the constitution.

The stokvel is also an effective mechanism for financing small and micro enterprises or home industries.

They are very common among rural black South African since there is still a strong culture of communal co-operation and this sector of society typically received the least services the under the previous apartheid dispensation.

The popularity and diversity of the stokvels indicates the resourcefulness of people living close to or below the breadline and the extent to which mutual co-operation can make a bad situation slightly better.