The Value of Savings Groups and Stokvels for Financial Inclusion in South Africa

The emphasis of financial inclusion is now on how more competitive financial markets can work better for poor people (Porteous, 2004). It acknowledges that increasing financial inclusion requires a better understanding of how services, formal and informal, can meet people’s needs (Ledgerwood and Jethani, 2013).

The current economic situation in South Africa presents a large number of people relying on the informal economy, severe unemployment, especially among the youth, rising inequality and one of the highest levels of indebtedness in the world. In this context, the most poor and vulnerable people often struggle to make ends meet, cope with shocks and access and afford safe and convenient financial services. FinScope South Africa 2017 found that the percentage of adults with a bank account has remained unchanged at 77% since 2016, while the percentage of adults using some form of informal financial service has slightly increased to 56%.

Seeking to better understand such trends and the underlying motivation to use financial services, FinMark Trust commissioned a qualitative impact study of SaveAct savings groups and stokvels in rural South Africa. This study has used a realist evaluation (RE) approach to explore impact not as a direct result of an intervention or input, but in relation to the context in which a programme intervention takes place and the reasoning of its beneficiaries. In this way, realist evaluation breaks down pathways of change into a series of outcomes and triggering mechanisms, allowing the identification of those factors that drive the use of financial services and trigger their impacts. This summary presents the main findings on impact and drivers of change for SaveAct savings groups programme and indigenous stokvels.

The research identifies five main areas in which SG members use their loans and share out money, namely for household construction and renovation, school fees and other education-related expenses, to start and run small income-generating activities and to cope with emergencies.

The study found strong evidence that the SaveAct model delivers a strong value proposition for a range of population segments, particularly rural women. Some of the mechanisms for joining SGs and stokvels are similar, such as the desire to be part of groups and do things together, as well as the motivation that groups give people to put money aside regularly and for a particular purpose. However, while stokvels are focused on a particular expense or goal (e.g. food or death insurance), SGs appear to be more suited for savings and investments.

The research identifies five main areas in which SG members use their loans and share out money, namely for household construction and renovation, school fees and other education-related expenses, to start and run small income-generating activities and to cope with emergencies. Overall, SG loans and share-out monies are considered an additional source of income and members use SGs to stretch the value of their money and juggle money between different services. These uses cut across a variety of SG members and the model is highly inclusive. Research with non-SG members revealed minimal signs of risks of exclusion for younger and more vulnerable households. These younger women lived with young children and unemployed or casually employed husbands, and they mainly relied on child grants. They felt that they were not financially stable enough to join SGs.

The SG members interviewed were, instead, in a less vulnerable position, with more income sources, among which were remittances from their husband and adult children. It is hard to say whether this socio-economic situation is a result of their long-term membership with SGs. Most probably it is a result of both their membership and their initial socio-economic position. As a result of both the different socio-economic position of SG members and the higher suitability of the SG model for savings and investments, impact data shows that there is greater learning and improvement for SG members than stokvels members.

For more information contact


Farai Muronda
Head of the SA Financial Inclusion Programme
Email: faraim@finmark.org.za
Tel: +27 (0) 11 315 9197