Stokvels are a favoured way of savings for South Africans, with an estimated million of these societies in the country and about R49-billion invested.

A number of stokvels collect a fixed sum of money from members on a weekly, fortnightly or monthly basis and, after a period of time, the money is used to bulk-buy groceries.

However, often while the money is being saved in a central fund it is kept at one of the members' homes, where it doesn't earn interest. Its value is eroded with time and it is at risk of being stolen.

This is what has led Pick n Pay, in conjunction with Absa, to launch a grocery stokvel account that allows stokvels saving for groceries to earn interest on their savings until they spend the money at the store.

In this scheme, stokvel members deposit their savings directly into a specially designated Absa savings account, the Grocery Stokvel Account. This can be done at any Absa branch or ATM. The first cash deposit made by the stokvel each month is free. Members can also transfer money to the stokvel's account at no cost.

Money deposited into this account earns an interest rate of 3.75% a year for balances over R50. Pick n Pay says this compares favourably with other types of stokvel accounts on the market where the balance has to be R20000 before interest can be earned.

However, in order to benefit from the interest, the money in this account can only be spent at Pick n Pay.

When the time comes for the stokvel members to spend their savings on groceries, their designated members can visit an Absa branch and place a notice of withdrawal with the bank.

Absa then pays the money into a Pick n Pay account and within 24 hours the funds will be available to the representatives of the stokvel

Papi Rapolai, general manager for wholesale and stokvels at Pick n Pay, says: "Stokvel groups saving for groceries or other store-bought essentials can use the new Grocery Stokvel Account as a savings mechanism.

"It is safe and convenient to use and they don't have to carry the cash when making their bulk purchase."

In addition, stokvel members will harness additional value and benefits offered by Pick n Pay.

One of the additional benefits includes free deliveries to the stokvel's chosen venue within a 15km radius of the Pick n Pay store for purchases over R30000.

Stores will also assist with separating and packing the groceries.

Stokvels will also enjoy Smart Shopper points - one point for every R2 spent.

Absa is not charging any management fees for this type of stokvel account.

"Our stokvel propositions are tailored in response to the needs of our customers and represent an informal way of enabling members to start saving and become active participants in the stokvel economy," says Thami Cele, head of savings and investments at Absa retail and business banking.