Stokvels making income way to go
With South Africa boasting a large number of stokvels, it is encouraging to see that the R50-billion save-and-get-paid-later vehicle is mutating into a wealth-generating machine.
One such initiative, which is run by entrepreneur Nicolas Manyike, aims to invest funds collected from stokvel members in property.
A few months back I detailed in this column how businessman Kibiti Ntshumayelo and his close friends started a stokvel that specialised in buying houses close to academic institutions, refurbishing them and then renting them out to students.
Each individual participating in Kibiti's stokvel would contribute every month and after a period of time the funds would be used to purchase the house.
After a few years, profits generated by the stokvel would be used to finance overseas trips for the participants' families. Some of the money would be put back into the stokvel to purchase more properties.
Manyiki and Ntshumayelo's stokvels are different to most stokvels, which largely buy groceries for the festive season, or pay out a cash lump sum to different members.
The pair's stokvels differ in that Manyike's later aim is to buy property for members.
"There's no freedom without financial freedom, ownership of land and properties. The majority of black communities are still suffering the effects of apartheid," said Manyike.
He said stokvels have been around for decades and most of them are sustainable.
He believes the same method could be used to purchase properties. His stokvel, dubbed Property Stokvel Investment Club, has two phases.
"Phase one [is where] we have a pool account where a monthly contribution is R2100. Our aim is to accumulate between R4-million to R8-million to buy a property that will generate an income for us.
"As soon as we buy our first property, we are going to implement phase two, where we will focus on buying houses for our members," he said.
"We want to create wealth that will allow us to retire comfortably at an early age, but most importantly to create a legacy for the next generation.
"We want to buy land and properties in places where there is competitive rental income and which are close to working areas and educational institutions" he said.
He said his initiative is open to everyone who aspires to have financial freedom and create wealth through property.
People should be cautious before joining stokvels due to many pyramid schemes popping up daily.