TRANSITION FROM A STOKVEL TO A FORMAL BUSINESS: A STUDY OF STOKVELS IN SOWETO, SOUTH AFRICA
Date
2011-04-18
Authors
Ashong-Katai, Rahinatu
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Abstract
Context
The study undertook an investigation into the desirability and feasibility of stokvels; the most vibrant saving schemes in South Africa to create formal businesses that will provide them with increased income, empower them and generally improve their socio-economic standing.
A brief statement of the problem
The study explored the desirability and feasibility of stokvels to transform themselves into formal businesses. Factors that impact the perceived desirability and perceived feasibility of the stokvels towards creating formal businesses were explored and used to assess the possibility of stokvels to transition their operations into formal businesses.
The method of the data collection
The research was conducted through in-depth interviews with respondents from stokvels in Soweto. An interview guide was used to allow the researcher to probe for more specific answers and to promptly clarify any misunderstandings that may occur. Audio recording of all interviews were made. A questionnaire was also administered to allow the collection of ratings that were interpreted to assign weights to the concepts of perceived feasibility and desirability. The collection of both qualitative and quantitative data allowed the study to take a broader and complimentary view of the research problem
Key findings
The study found that the stokvels showed a strong desire in creating joint businesses. Their desires were motivated mainly by the need to create jobs in
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their communities as well as the search for additional incomes to uplift their lives. The main incentives of the stokvels were both utilitarian and selective. These incentives have driven the stokvels in search of additional benefits for their savings. While the stokvels will seek long-term investments over time, they will not lose sight of the social benefits that the stokvels provide. The study also found that the stokvels had begun to operate dual saving schemes with long-term investments in mind.
The study showed that the perceived feasibility of the stokvels for business creation to be high. The stokvels did not however have any strong external role models to inspire them into business creation, nor did they demonstrate a deep understanding about the extensive government initiatives for businesses in SA. It was also found that if the stokvels were to create group businesses they would prefer to operate these formally largely out of the desire to operate legitimately and to obtain financial support.
The key message
The entrepreneurship intentions of the stokvels were confirmed by this study. More and more stokvels will be seen to create group businesses out of the desire to generate more benefits for their savings but also because of the realisation in their potential to improve their communities. The survival of stokvel owned businesses is essential to poverty alleviation; therefore an attempt must be made to continuously influence the perceived desirability and feasibility of these businesses. The government, through the DTI, NGOs and other interested parties, should seek to ensure and project the success of stokvel owned businesses as the potential of these savings societies to improve the socio-economic standing of their communities cannot be overlooked. Despite the interest in creating joint businesses, it was evident that the stokvels will continue to operate in their original state while exploring other options of investment to improve the lives
Description
MBA - WBS
Keywords
Stokvels, Small businesses, Saving schemes