Policy Paper 19

A stokvel can in general terms be defined as an umbrella term used to describe informal savings organisations in the African community in South Africa. Stokvels operate mainly in black areas, and have social, economic and entertainment functions (Verhoef, 2002). The aim of the paper is to rationalise the possible use of stokvels as a channel or conduit to give poor households access to much-needed cash. The hypothesis that is rationalised and founded in this paper is that stokvels in South Africa can be used in their existing form, without adjustment, as a special purpose vehicle (SPV) and conduit to extend credit to the poor (see Smith, 2008, for a comprehensive but accessible exposition on securitisation).