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Property stokvels – a good idea or not?

Interest in the concept is on the rise but the chances of being suckered into a scam are high.
Stokvels are based on a circle of trust, which is unlikely to exist in a scheme with 100 members who don’t know each other. Picture: Shutterstock

Property stokvels have becoming increasingly popular. The recently released Old Mutual Savings and Investment Monitor 2019 reveals that a stokvel included in its survey reported collecting R24 million a year from more than 550 members.

Lynette Nicholson, head of research at Old Mutual, says it is not uncommon for members to contribute around R2 500 a month. “A group with 100 members can easily reach an annual investment of R3 million and a group of 30 can accumulate R900 000 a year off relatively modest monthly contributions,” she says.

However, Andrew Lukhele, chairman of the National Stokvel Association of South Africa (Nasasa), warns that with the rising popularity of “so-called property stokvels” comes increased risk of being taken for a ride.

Stokvel scams are tricky to spot

“Scams targeting stokvels come in different sizes and shapes,” says Lukhele, adding that they can be tricky to spot because, unlike pyramid schemes that claim to double your returns, they can appear to be legitimate and don’t seem too good to be true.

“For many South Africans, the idea of owning property is a distant dream. In a country with such a big inequality gap, some fraudsters are luring people into ‘property stokvels’ that are nothing more than elaborate scams,” he cautions.

Lukhele explains that the original idea behind a stokvel involves a circle of trust and peer pressure that encourages you to save in a group. “A stokvel is about rotation. So, typically you might have about 10 or 12 members and each member has a turn to receive a monthly benefit.

“However, once you start going into membership numbers of 100 or more, you start seeing problems. The element of a circle of trust is lost because these 100 members don’t know one another personally and in a number of cases, they do not personally know the people running the stokvel either.”

Lukhele says with more than 800 000 stokvel groups in South Africa representing an annual estimated R49 billion economy, Nasasa is aware that players are entering the stokvel market on the back of new technology and via platforms such as social media. “They [property stokvel schemes] are everywhere on social media, and all of them require you to attend some sort of presentation or join a WhatsApp group where registration fees are charged,” he says.

Your recourse in the event of fraud

Matimba Hlungwane, corporate attorney at Legal Aid South Africa, says that in the event of fraud in relation to stokvel funds, the innocent members will have to report the fraud to the South African Police Service (Saps). “The Saps will investigate the complaint and make a decision on whether to charge the member responsible or not. Where the member is charged, the case will be referred to the National Prosecuting Authority for prosecution,” he says.

What you should look for in a stokvel:

  • A stokvel should have a constitution outlining in clear language the rules of the stokvel, where member funds go, and how they will be redistributed.
  • Stokvels should have a leadership structure that outlines who the chairperson and treasurer are, as well as the purpose of the stokvel.
  • There should be regular meetings where members can ask questions and receive feedback.
  • Contributions should go into a single bank account. Lukhele says funds being channelled to individual or separate accounts should be a red flag. “For example, you should ask questions if you see that registration funds are going to one account and monthly contributions to another,” he says.
  • Ask the person running the stokvel where your money will be invested and how the stokvel can prove to you that it is invested.
  • Ask how you will be able to keep track of your contributions.
  • Make sure that you will get a monthly statement and that the contribution structure is transparent – in other words, will you be able to see exactly where your money is going?
  • Ask what happens should a member fail to pay.
  • Finally, find out upfront what recourse you have should the scheme collapse – how will you get your money back?

Readers: Are you or have you ever invested in a property stokvel? Contact to share your story.



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Why invest in a stokvel and not in a property fund? As I see it a stokvel gives better opportunity for crooks to steal people’s money because it is not very well regulated.

You have to believe in the ANC to be a stokvel supporter. Both are disaster on the move.Good luck.

A property stokvel is basically similar to property syndication and we all know how that turned out. A stokvel is the product of the collectivist culture. The value of an individual is measured by the contributions he can make to the group, not by what he can do for himself. Friends and family members come together and save as a collective. It brings them a joy to see the fruit of their combined effort. Individual rights and accountability carry no value in this culture. “The accountability lies with the collective”. This society is contribution-driven. To each his own….

The free-market capitalist culture values individual rights and liberty. Individuals from this culture want to hold the title deed to their assets. They believe that the property rights of the individuals form the basis of a prosperous society. This group expects individuals to act responsibly and to be accountable for their actions. This society is results-driven.

Every system from these different cultures has a predetermined outcome. The results are clear to see all around us. This explains the “wealth gap” or inequality in society.

As citizens, we are members of the ANC stokvel. We do the saving, and the politicians enjoy a monopoly over the spending.

Somebody find this person and fund a political party for them. I’d revolt in your name! Comments of absolute gold on a daily basis!

End of comments.



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