Stokvels in South Africa, while largely misunderstood by traditional financial firms, are a thriving community savings system. The National Stokvel Association of South Africa estimates that stokvels are worth R49-billion. Traditionally, stokvels have functioned as vehicles to assist families with funeral arrangements. They are also used to take advantage of discount deals at wholesalers for basic household items and staple foods with a long shelf life. Another popular stokvel structure is a "revolving bonus" system, whereby members contribute a certain amount monthly, with each member in turn getting the group's contribution every month. Some stokvels have evolved into long-term investment clubs, in which relatives and friends pool their money to save up for their children's education or to buy big-ticket items. Stokvels are also useful if you and a group of friends or associates have a common goal and need a "buddy" system to keep everyone accountable — particularly if some member...

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