The Power of the Collective
As the founder and chairperson of the 2019 award-winning Sakhisizwe Property Stokvel, Silindile Leseyane - who is also Business Analyst at Absa Corporate & Investment Banking - has made real the dreams of hundreds of low-income individuals, particularly women, through the stokvel’s investment into property assets.
The generational microfinance practice of stokvels, brought about by the frustration of low-income earners being excluded from the formal financial sector, have never been officially recognised, yet they have created a multi-billion Rand industry that ensures a strong moral and social bond between members, who rarely default on their monthly or weekly stokvel contribution.
The stokvel network is so effective that estimates from the National Stokvel Association of SA (Nasasa) are that there are more than eight million stokvels in the country, with more than 11-million adult participants, generating up to R59-billion in circulation through the nationwide schemes.
Some are focused on specific investments, such as funeral and burial schemes. Sakhisizwe’s focus is on property, which is pertinent to the translation of the Nguni word, which means ‘we are building the nation’.
Silindile’s future as a catalyst for the investors of Sakhisizwe Property Stokvel, was unconsciously embedded as a small child growing up in the small rural municipality of Piet Retief in Mphumalanga. It was here that she was exposed to the benefits of the stokvels her mother and other family members participated in through this centuries-old informal banking system. The rotational payouts allowed Silindile’s family to enjoy six month’s of groceries, and it is through these stokvel payouts that manifested in the building of township home ‘backrooms’ which were rented out by her family, which ensured that they had an additional income stream.
The potential of wealth creation brought about through property ownership was, therefore, cemented in Silindile’s mind as a truly financially transformative power.
When did you first explore property investment and realise the potential of uniting it with a stokvel?
When I started working I rented a flat and a year later, after doing the math, I realised that I could afford to buy my own home. I was 23 when I secured a bond for a two-bedroom flat, and rented out one bedroom which allowed me to begin my property investment journey. However, there came a point where I could no longer access further home loans and so the idea of crowd-funding to purchase a property was born. I realised that as an individual I could only buy one apartment or flat at a time, but if I was part of a bigger group, collectively we could acquire an entire block. The creation of a stokvel was the obvious route given its benefits were already proven in society.
What makes the Sakhisizwe Property Stokvel dynamic?
Since its formation in June 2019, the stokvel has raised over R20-million from just 400 members, which has been invested in multiple properties. This type of investment would ordinarily be inaccessible to these individuals, who are from all parts of the country, and have either been referred by existing members or join through exposure to our social media channels.
Whilst we do not have any specific criteria for qualification as a Sakhisizwe Property Stokvel member, tech-ability and access to smart tech is, however, a necessity given that we have an App for tracking contributions and withdrawals, host monthly virtual meetings, and constantly engage with our members through a WhatsApp group. These platforms are managed by an experienced team that also assist with the sourcing of investment properties, which are valued to ensure great returns, and when an acquisition is approved, is handed over to property management specialists.
Is the stokvel investing in properties that have alternative power solutions, or seeking to do so?
Yes, we are definitely looking at utilising alternative power solutions. Some of our properties are student accommodation, so back up power is a necessity. However, due to the high upfront costs of installing alternative power solutions such as solar, we are exploring alternatives such as renting or leasing the equipment as it will have less impact on our cash flow.
How has winning the SAPIN Investor of the Year award in 2019 for the Sakhisizwe Property Stokvel transformed the lives of its members?
It was life-changing. We won amazing prizes including investment coaching, and the exposure alone provided us with access to new opportunities and collaborations that would otherwise not have been accessible to us as individuals. It also cemented us as credible players in this space proving that you do not need large amounts of money to invest in property … that collectively anything can be achieved. Most importantly, it inspired others to start property-focused stokvels who benefited from the lessons we learnt and shared.
What challenges does your and other stokvels face in the current environment?
South Africans in general are facing tough economic challenges with high inflation, fuel and food prices and the current interest rate environment is also not conducive to personal upliftment. Stokvel members are not immune to these economic shocks so savings or investments take a back seat. Even within the Sakhisizwe Property Stokvel we see this playing out in a decline in contributions. The good news is that through Sakhisizwe Property Stokvel, some of our members are able to avail of an additional income stream that assists with easing some of the financial pressure. We also use our bargaining power as a group to negotiate discounts with suppliers on goods and services that we feel would be beneficial for our members.
How has the load shedding regime impacted on your stokvel members, and are they still able to meet their stokvel contributions?
Like all South Africans, load shedding has had a huge impact on our members. Lack of access to power affects productivity, especially those that rely on income from their small businesses who already experience financial challenges. This, along with the interest rate hikes, has had an impact on our member’s ability to honour their contributions. Fortunately we have not seen an increase in members wanting to exit or withdraw their investments.
How do stokvels play a role in the transformation of the economy of the country and its communities?
Aside from the estimated R59-billion circulating in SA’s stokvels, research indicates that the average South African family is involved in at least two different stokvels. They play a significant role in our communities given they are able to assist families to save and cater for their financial needs without having to resort to expensive forms of credit. They enable short-term savings and also provide basic funeral insurance.
Until recently, stokvels have always been used for insurance cover purposes and, as mentioned, short-term savings or income rotation. However, of late, stokvels are becoming more sophisticated and are investing in assets that aid with wealth creation such as we do through the purchasing properties, but also livestock, shares and businesses. When stokvel groups are focused and have a vision focused on wealth creation, they are further able to alleviate poverty and can provide for retirement and generational wealth.
It remains that stokvels have a huge untapped potential for the role they can play in allowing more South Africans to participate more meaningfully in our economy.
How so?
When stokvel members agree to come together and pool their resources towards a common objective, they are able to achieve economies of scale as a group. Aside from the previously-mentioned benefits, this also includes access to credit for the unbanked, and they motivate for savings so members avoid debt when purchasing large ticket items. At essence stokvel members strive to optimise their economic, social and cultural needs, which in turns strengthens the communities in which they live.
Why then do you believe there is no official recognition of this form of savings?
Stokvels are still largely misunderstood and, as a result not a lot is done to tap into the real power that they have. There are a lot of misconceptions and negative connotations with stokvels but when you look at how cooperatives or Savings and Credit Cooperative Organisations (SACCOS) work in African countries, there is no doubt that there is huge potential to turn the billions that stokvels contribute into real and sustainable economic transformation, let alone improve the financial wellbeing of members.
How satisfied are you as the founder and participant of such a successful stokvel?
It brings me an immense sense of accomplishment because we have shown that there is an inclusive way for South Africans to invest in their future regardless of their circumstances. If more stokvels can do what we do, which is to think beyond short-term savings and consumption, we can change the perception that South Africans don’t save or invest.
There has been government talk of introducing a Stokvel Bank. Your opinion on this?
I think it’s a great initiative, in fact so is anything that will assist more South Africans to enter affordable mainstream banking. However, what would have an even bigger impact is if stokvels retain their self-organisation through the formation of SACCOS initiatives. These already exist in economies such as Kenya, and are significant players in major sectors of the economy; agriculture is one, to such an extent that these SACCOS-focused initiatives even compete with established industry players such as banks.
In 2021, the United Nations (UN) estimated that over US$6-billion was collected through deposit taking SACCOS in Kenya, which proves the true power of self-organised stokvels. Whilst I am aware that there are a handful of stokvels in South Africa that are operating as Cooperative Financial Institutions (CFIs) and which have been granted the relevant licenses by the South African Reserve Bank, we can’t always wait for the government to motivate things, sometimes we need to take action ourselves.