20 May 2019
Stokvels in the Eastern Cape are increasingly lending money to people outside the stokvel, charging high interest rates to make money for members.
National Credit Regulator spokesperson Rishana Singh says if a stokvel lends money to people who are not members and charges them interest, the stokvel must register as a credit provider in terms of the National Credit Act (NCA) and comply with the provisions of the NCA.
Singh was responding to GroundUp’s questions about stokvel members who have become mashonisas, lending stokvel money to people outside the stokvel and charging them 50% interest a month.
Stokvels are widespread throughout South Africa and for many people, especially women, are the main form of savings. Women put money aside from January, preparing for the festive season. At the end of the year the money is paid out. The funds are mostly used for groceries, clothes for children, or kitchen materials.
But some stokvels insist that in order to join, new members must get other people to borrow money from the stokvel and return it with interest. Would-be members who can’t find customers are expected to borrow money themselves and repay it with 50% interest per month.
This is said to be a rule of the stokvel even though it is often not written.
Unlike some of the mashonisas, these stokvels do not hold on to borrowers’ IDs or SASSA cards. However, when they want their money back they take goods from inside the borrower’s house to sell.
Zuzeka Fikela from Ntsholomqa village in East London became a target of loan sharks inside her own stokvel.
“Don’t get me wrong, I’m also part of the problem,” she said.
For three years Fikela watched a group of stokvel women in her village spending money during festive seasons. She said each month they paid R250 and each member was expected to raise a certain amount on top of the monthly instalment.
Fikela, who now works as a casual worker in one of the factories in West Bank, East London, said that when she found a full time job earlier this year she joined the stokvel.
“I was told that each month we must pay R250 and each member had to raise R3,500 a year on top of the monthly instalment,” she said. “They made it sound so easy as if there are customers who are willing to borrow money and pay interest.”
“If only I had known, I would not have joined this madness. But then, who can say no to R6,500 in December?”
She said for the first two months she failed to get customers to borrow money from her. In March she decided to borrow R1,000 for herself, not because she needed it but because most other members were already raising the R3,500, some even more.
“Honestly we are forced to become mashonisas whether we like it or not,” said Fikela. She said she managed to pay back the R1,500, but still had to raise R3,000 more. In order to raise R3,500, a member has to borrow R7,000 from the stokvel.
In April Fikela said she borrowed R3,000 because she was feeling the pressure from other members. Then she was retrenched in the same month.
“That was when I faced the fury of stokvel women. I failed to pay the money and asked them to give me a chance to raise the money. I know the rules: once you fail to make the payment the interest doubles. None of them were interested in listening to my problem,” said Fikela.
GroundUp listened to a WhatsApp voice message from one of the stokvel women who was shouting at Fikela demanding the money back with no excuses.
“Even if I manage to pay all the interest but fail to return the R3,000 in full, the loan will continue increasing until I return inkunzi (the full amount) I borrowed, ” she said.
GroundUp investigated three stokvels in Tsholomnqa and two in Nompumelelo township in East London. All the women we spoke to said their stokvels were doing the same.
Of the five stokvels we investigated, one charged 40% interest and the others all charged 50%.
Busiswa Matshoba from Nompumelelo township said members of her stokvel paid R200 a month and each member had to raise R2,500.
“Lending money to people outside the stokvel helps us raise the R2,500. In my stokvel you raise as much money as you can, as long you pay inkunzi and the interest then you will get all your money in December,” said Matshoba.
She said she never struggled to get customers. “Just advertise yourself as mashonisa. People will come to you. But make sure you lend small amounts so that if some fail to pay, you can cover the debt.”
Singh said: “It is worrying to hear that members are forced to take out loans from the stokvel and they get ‘harassed’. if this is indeed the case, members should report such cases to their nearest SAPS.”
She advised consumers like Fikela to lodge complaints with the National Credit Regulator.
“Even though a transaction between a stokvel and a member of that stokvel is not a credit agreement in terms of the NCA, it is worrying that the interest charged for the loans is exorbitant,” she said.