S. African savings clubs brace against bad times

Money is counted at a stokvel meeting in Nhlazuka, South Africa, on Thursday, Dec. 11, 2008. The stokvels are savings clubs that have worked for generations in South African villages and towns, even in times of economic hardship. (AP photo/John Robinson)

Donna Bryson

NHLAZUKA, South Africa — Fano Ephraim Mtshali hasn’t held a steady job since 1998 and claws out a living for himself, his two children and his eight orphaned nieces and nephews by growing vegetables.

But Mtshali, 59, isn’t cutting back on his monthly contribution of about $5 — the cost of a Christmas ham — to a savings club he started with fellow villagers in South Africa’s Zulu heartland.

“Even if there are economic problems in the country, I can’t give up” on the club, he said.

The clubs, known as “stokvels,” have worked for generations in South African villages and townships. Each neighbor contributes a small sum and can draw loans from the pot — often kept in a member’s home instead of a bank — for necessities like school uniforms or emergencies like a doctor’s visit.

The simple, age-old formula is facing new pressures at a time of rising food prices and an international financial meltdown. But stokvel advocates say they have been remarkably resilient.

“The poor are very capable of managing their own funds and finances very effectively,” said Anton Krone, who runs SaveAct, a development group that helps stokvels work out savings, lending and security strategies.

Grietjie Verhoef, a University of Johannesburg historian who has studied stokvels, said because members have lived and worked together for years, they are diligent about meeting obligations to one another. When times are hard and they struggle to keep jobs or get credit from formal financial institutions, their stokvel seems even more important.

“Under a downturn situation like now, these organizations actually gain credibility,” Verhoef said. “People say, ‘I’m saving with my friends and I can rely on my friends if calamity comes.’”

In early December, Mtshali’s neighbors politely left their shoes at his muddy threshold and walked across the cool green tiles of his front room to gather at a lace-covered table. They chatted while he pulled a blue metal box from a bedroom cupboard, sang a hymn, said a prayer and got down to business.

First, the bookkeeping. Everyone watched as bills and coins were drawn from the box and counted into a dinner plate. When one woman was given the wrong change after repaying a loan, several laughing voices corrected the treasurer.