“The Old Mutual Annual Survey Report in 2016 further showed that that usage of stokvels in South Africa by black households has increased from 50% in 2010 to 59% in 2016. As a consequent, there are different types of stokvels that black household members belonged to. In 2016 there were burial stokvels at 34% and followed by grocery stokvels at 18%. At the same time, these stokvels and burial societies consume global products.”
By Ashley Nyiko Mabasa (Holds Masters Degree in Labour and EconomiSociology at Wits University)
The ANC government has been turning a blind eye to revitalisation of the township economy for the longest time. The township economy continues to reflect the legacy of apartheid. Black cheap labour is reserved for the industrial sector in cities, particularly mining sector and now retails stores. Global and local monopoly capitalism has entrenched townships through building of malls with multinationals stores and financial institutions such as Istore-Iphone, Absa, Nike, Standard Bank and Pick n Pay.
Under the current inherited nature of the capitalists’ state, our country has no control over global capitalism. Especially since the ANC government around 1996 reached agreement with the World Trade Organisation (WTO) that it can control our tariff imports from Europe and the United States. Consequently, global forces entrenched its hegemonic powers in our country through markets.
This resulted in deindustrialisation of South Africa’s local economy and cemented global market hegemonic power to determine maize and breads price. Noting that the apartheid government used to have Maize Boards that regulated maize prices with global forces. Today South African maize is determined by global forces in Chicago.
Our government’s agreement with WTO led to key sectors such as clothing and electronics deindustrialising. This can also be attributed to delay of transformation of townships since the 1994 democratic breakthrough. Our townships continue to reflect the black working class and the poor in the uttermost vacation of consuming with producing anything because of lack of employment.
Gauteng government came with a progressive plan to revitalise the township economy. It is plausible that this government initiated the revitalization of the township economy project. The Gauteng township economy seeks to build an inclusive economy and alleviate poverty and inequality in the province. Since the inception of this project, Gauteng government has been playing a significant role in building the township economy. Today, Gauteng has 14 registered co-operative banking institutions serving over 16,000 member-owners, with over R100 million in savings and R150 million in assets.
Revival of Township Economy Through Stokvels and Burial Societies
Stokvels have long been existing in South Africa. Their origin can be traced to colonial and apartheid regimes which marginalised black South Africans and excluded them from the mainstream economy. The fact of the matter is that stokvels appeared in the black communities so that black people could survive the economic and social oppression imposed by the apartheid system, buttressed by racial, class and gender exploitation.
The first component of stokvels was the Bantu Burial Society formed in 1932. ANC government must unbundle the economy by bringing stokvels and burial societies into the mainstream economy. This will automatically revitalise the township economy. People joining stokvels must also purchase locally produced products.
The apartheid regime has created a perception that stokvels are structures for poor black communities and for older generations. On the other hand, stokvels are considered informal organisations by the banking sector, although they are governed by a set of rules and principles through their members. These capitalist driven stereotypes behind stokvels continue to exist in our townships and rural areas.
Stokvels have kept lives thriving because it creates a social economy where black people locally share their money and buy each other groceries at certain times of the year. Stokvels contribute to the economy of our country. Therefore, our government must begin to assess the ways in which they can penetrate the stokvel industry and grow it to be eventually incorporated into the mainstream economy. Over the years stokvels in our country have been growing phenomenally.
Stokvels seriously contribute to community development and local economic growth in several ways – such as the creation of employment and micro businesses. In other words, stokvels strongly contribute to the promotion of financial capital, social capital and social cohesion. On the other hand, they also significantly serve the market. They are reported to contribute about R45 billion to the economy.
It is estimated that there are 800 000 stokvel groups with 11 million individual members. Gauteng standing at 24% of the people engaging in stokvels (see figure 1). Gauteng has the largest townships in South Africa. Combined, Soweto, Tembisa and Katlehong has almost 2 million people.
The Old Mutual Savings and Investment Monitor Annual Survey embarked on the task of contacting black Africa households about their investments. In 2016 they revealed that the stokvel sector’s estimated economic share has increased to R49 billion in savings. A total of 8% of these, which is about R8.8 billion, were formed to buying groceries.
The Old Mutual Annual Survey Report in 2016 further showed that that usage of stokvels in South Africa by black households has increased from 50% in 2010 to 59% in 2016. Consequently, there are different types of stokvels that black household members belonged to. In 2016 there were burial stokvels at 34% and followed by grocery stokvels at 18%. At the same time, these stokvels and burial societies consume global products.
The ANC government, in line with their 54th National Elective Conference, adopted Radical-Socio Economic Transformation. The revitalization of the township economy is very important and stokvels and burial societies are central to boosting this. The ANC must also revitalise the township economy to solidify transformation of the economy to black people.
Dismantle the apartheid-capitalists legal framework
Government must revisit the Friendly Society Act of 1956 and Bank Act 1990. This was the strategic framework put together by the apartheid capitalist government because they wanted burial societies to work in a way which benefits apartheid financial institution such as banks. Burial societies are supposed to open an account with a bank and are not allowed to accumulate money without banking it. As well, the Bank Act recognises stokvels within a legal entity, and place limits to the maximum level of deposits for Stokvel to R9.99 million.
The ANC government must adopt the bottom-up approach in dealing with economic transformation. If it is serious about the call for radical economic transformation they must start by amending the Friendly Society Act of 1956 and Bank Act of 1990 to allow small scale burial societies to open accounts with banks. Currently burial societies open bank account as cooperatives and some bank their money under the beds.
Still today these acts benefits only big banks such as FNB, Standard Bank and Absa. ANC must attempt to eradicate these laws which seek to work in favour of capitalism, by forcing the burial societies to work with banks and give restrictions of level of deposits for stokvels. Government must continue to buffer the Cooperative Act of 2005 and amend the National Credit Act 2006 because this act poses limits on the interest rates for loans, which currently stand at 32% per annum. As thing stands, the phenomena of stokvels are informal structure (majority of them) and National Credit Act are impossible to apply to those stokvels. Government must scrutinise these laws in order to make them work in favour of stokvels.
There is no clear Act which governs stokvels but they are regulated by National of Stokvel Association of South Africa and apartheid Bank Act of 1990. This is troubling because, post the-apartheid regime, government has not paid enough attention in the development of stokvels. National Stokvel Association of South Africa is the mobilising group of stokvels and it is only authorised by the Reserve Bank’.
SACP and FSCC
In 2004 the South African Communist Party (SACP) made a critical call to the Financial Sector Campaign Coalition (FSCC) and SAFOBS. These are entities created to enhance the regulation of burial societies mostly in the townships. The General Secretary, Blade Nzimande, in his address on 16 October 2004 at Johannesburg City Hall, called upon SAFOBS and FSCC to ensure that burial societies can deal with a bank on the basis of the needs and interests of members of burial societies and not based on profits for bank.
Since its launch of the FSCC in 2000, the SACP has been placing pressure on South Africa’s financial institutions to be considerate of the poor and working class. The SACP campaigned against banks exploiting the poor and called for government to transform the financial sector. The SACP called for the following:
- To struggle for community re-investment legislation and the transformation of the financial sector in favour of the poor and working people
- Banks, through legislation, need to be forced to set aside certain amounts of money in low-cost housing, SMMEs, the informal sector and other developmental initiatives beneficial to the working people and the poor
- To build co-operatives through an appropriate legal and financial environment
- To fight for the creation of a co-operative banking sector and other publicly owned financial institutions
- Creation of a co-operative banking sector, in which the savings of the working class are decided by the working class itself and can be used to address the developmental needs of our people. For example, in a country like Cyprus, co-operative banks, which are legislated in law, provide for housing, infrastructure and loans to ordinary people at rates below the lending rates of commercial banks. There is no reason why we should not be saying the time has come now for the workers’ to reclaim their stokvel monies , insurance investments and for their provident funds to be used for the benefit of the people.
- The convening of an urgent sectoral summit on development financing and banks. We need to ensure that this issue is placed very high on the agenda of NEDLAC.
- This campaign also needs to deal with the issue of prescribed assets.
- The campaign should also contribute to the evolution of a strategic approach around the restructuring of public development finance institutions like the Development Bank of Southern Africa in order to re-orient these towards infra-structural development initiatives aimed at realising overall development goals.
The SACP must revive and intensify the FSCC and the call for government to build the state bank that will only focus on the township economy. This bank must solely focus on stokvels and burial societies. It must push government to assess cooperatives, because 85% of these funded by the state failed whilst government has already spent around R1billion on cooperatives.
Build the state bank to boost the local economy
Our government must strategically boost the township economy through stokvels. This can happen in a variety of ways.
Firstly, going back to an undying debate that our government must establish a state bank. Understanding the development of the British, one will comprehend that British government was controlling their banks. This is not dissimilar to the one of the National Party 1989 resolution and the ANC elective conference 2017 resolutions that must further take a step to nationalise South Africa’s reserve bank.
Clearly, with a state bank and the nationalisation of the reserve bank, our people can afford to make their transition cheaper as Standard Bank alone takes, through bank charges, about 6 cents (in 2004) for every deposit made by each member of more than 50 000 members. This comes close to R300 000 per month. It is troubling that in post-apartheid black people continue to be financial enslaved by banks. Figure 7, show stokvels which are predominated by black working class and the poor benefit South Africa’s financial institutions.
The Post Office, through the Postbank which is a state financial institution, hold more stokvels accounts to Standard Bank. The government must revive the Post Office and boost the township economy by encouraging stokvels and burial societies to bank with Postbank. However, the Post-Office must be treated as a workers and community bank. The Post-Office must not be involved in mainstream markets of the financial sector. Like Northern Province of Italy did not engage in financial markets hence the 2008 bubble burst did not affect this area of Italy.
Practical fight capitalism system
Surely there is a need for a combat strategy to replace the capitalist emphasis in especially the financial and agricultural sectors. It is essential for the land issue to be resolved to recreate the manufacturing sector. Most of the food can currently be manufactured or processed in our country. ANC, at its watershed 2017 elective conference, resolved for the expropriation of land without compensation. As former Chinese President Mao Zedong pointed that “a revolution is not the same as inviting people to dinner.” If the ANC is serious about Radical Socio-Economic Transformation, then it must use the Industrial Development and Corporation (IDC) and Land Bank to fund black farms. Local food production must be supported. Legislature must be developed to force shops such Pick and Pay and Spar to buy more locally produced food than imports.
Let’s pause and check the facts – through purchase of grocery stokvels contributes a lot to our economy. For example, Shoprite (69.9%), Pick ‘n Pay (49.2%) and Spar (32.9%) are the three main retail outlets used by individuals for their grocery purchases. When it comes to shopping for the stokvel, this varies slightly with the top 3 outlets being independent wholesalers (23.3%), Shoprite (20.7%) and Spar (10.6%).
If these groceries are purchased locally the township economy, for instance in retail consumer cooperatives, can rapidly revitalise our township economic. Therefore, the consumer cooperative can significantly supply local food to stokvel members. Given that they issue members of the grocery stokvel, the challenge they are mostly faced with, is the lack of transport. Government must supplement members of stokvels buying at local cooperatives with transport to deliver.
Society is confronted with enormous social and economic challenges which can be resolved by revitalising the township economy through boosting stokvels and burial societies. Our nation needs an urgent solution to address three oppressions; poverty, unemployment and inequality.
ANC government must critically attempt to assist black people to revitalise their local economies by helping to integrate the local economy into the mainstream economy. This might also improve living conditions and create job opportunities. Ultimately, government will minimise social and economic problems such as inequality, unemployment and poverty among black people.