South Africa’s informal savings market thrives despite high financial inclusion levels

South Africa’s informal savings

South Africa’s informal savings market thrives despite high financial inclusion levels – R44 billion collectively saved in approximately 820,000 stokvels.

Financial exclusion is not a myth. In low-income countries and areas, financial exclusion is for many an undeniable reality. For communities in these areas their financial services needs are seldom met because financial services are either inaccessible, and where accessible are either too expensive or inappropriate. This though does not mean that individuals in those communities do not have financial needs or goals. To the contrary they do!

So, when the formal financial services industry is unable to meet the needs of those deemed low-income, community members come together to bridge the gap left by the financial services industry. These unserved community members, through various platforms, find self-help solutions for their needs and money goals.

Individuals in communities mobilise and identify people with similar financial needs; be it savings, investment, credit or insurance, and create an informal financial services market for themselves by establishing groups with specific financial services outcomes.

This informal financial service market ultimately creates a platform for individuals and businesses in unserved/underserved communities to save, borrow and insure, thus helping them acquire assets through accumulated savings, borrow for planned and unplanned events and mitigate risk.

Stokvels[1]in South Africa have for decades served communities as this informal market. The historically disadvantaged, majority of whom were low-income earners, found a mechanism to meet their financial needs when the formal financial services industry excluded them. Post-apartheid this market is still in existence and thriving with annual savings of approximately R44 billion, collectively saved in approximately 820,000 stokvels. These take different forms such as Burial Societies, Investment Clubs, Umgalelo Clubs[2]and Youth Clubs.

Post-apartheid this [informal savings] market is still in existence and thriving with annual savings of approximately R44 billion, collectively saved in approximately 820,000 stokvels.

Although financial inclusion levels in South Africa are relatively high at 80 percent in 2018, these self-help initiatives still have a role in communities as their existence generally goes beyond what the formal financial services industry can provide. The SA FinScope 2019 survey shows an increase in informal savings from 18 percent in 2018 to 24 percent in 2019.This indicates a rise in the number of individuals who belong to stokvels supporting the notion that stokvels go beyond meeting financial needs and goals.Over and above supporting savings they, provide moral and social support during times of bereavement, socialising platforms for communities, collateral thorough group surety when one of their members needs such surety, and are agile in decision making and resolutions amongst other.

It thus goes without saying that savings groups, regardless of what they are termed or where they are found, are able to not only provide for their members’ needs with their financial services needs, but also to provide social security and allow for communities through the pool of funds to reach goals they wouldn’t have been able to reach on their own.

Beyond financial needs and goals, people have moral/social support needs and general social security needs. What better way to meet all these needs than through one platform – savings groups. Even with the financial services industry doing more to serve low-income earners, the use of the savings groups models does not look like it will be replaced. They exist not purely for financial needs and goals, but go way beyond this!


[1]Savings groups in South Africa are known as stokvels

[2]Often formed for religious reasons

Written by


Lesego Mashigo
Financial Inclusion Specialist
Email: lesego@finmark.org.za
Tel: +27 (0) 11 315 9197