OTE2601 Assignment 3 Memo | Due 8 July 2025

 QUESTION 1 1. Stokvels are popular and even banks offer stokvel options. Opening a stokvel account with a bank provides members with the security they do not get with informal stokvels. Compare the stokvel account from FNB or Standard Bank with the stokvel account of ABSA or Nedbank. In your answer, elaborate on the types and roles of various stokvels. What is a Stokvel? A stokvel is a type of informal savings club where a group of people agree to contribute a fixed amount of money regularly into a shared fund. This money is then used according to the group’s agreed purpose, such as giving each member a lump sum in rotation, saving towards a shared goal, or providing financial support during emergencies. Stokvels are built on trust and mutual support and usually operate with clear rules set by the members. Participation is voluntary and often based on community ties or personal recommendation. While traditionally informal, stokvels have become more structured over time and are an important part of South Africa’s financial culture, with millions of people involved and billions saved annually through these groups. Types of Stokvels There are many types of stokvels, each designed for a different purpose. Contribution stokvels allow members to receive a payout in turns, providing access to a lump sum for personal use. Basic stokvels focus on saving for specific events like holidays or medical expenses. Savings stokvels aim to build group savings over time, with members deciding how and when to use the funds. Grocery stokvels are common and help members buy food or household items in bulk at the end of the year. Purchasing stokvels pool money to buy income-generating assets. Family stokvels are used for larger family needs like buying a car or making a loan deposit. Investment groups focus on growing money through financial investments, while property stokvels allow members to invest in real estate together. Party stokvels use pooled money to host events that generate profit for members. Funeral stokvels provide support for burial costs, including coffins and transport, and are especially important in rural communities or among migrant workers. (OTE2601, SG. 2021:147-149) Roles of Stokvels Stokvels play an important role in South African communities. They offer a safe and supportive way for people to save money and access funds for emergencies, family needs, or long-term goals. Stokvels promote financial discipline, build trust among members, and reduce reliance on loans or credit. They often support people who may not qualify for traditional banking products. Over time, stokvels can grow into investment groups or small businesses, helping members move from informal saving to formal financial activity. In some cases, stokvels have also been a first step for communities to enter property or business ownership, making them a valuable tool for economic empowerment. (OTE2601, SG. 2021:149) Comparison of Bank Stokvel Accounts Banks now offer stokvel accounts to give groups more secure and structured savings options. These accounts are designed to protect members’ money and offer interest and other benefits, depending on the bank