Beyond the box: how to safeguard savings?

by Shelagh McLoughlin
5 December 2017
5 December 2017


Many savings groups resist banking their money for a variety of reasons, but there are moves to change this

“When we opened the box we found that the money was missing. We went to the box-keeper’s homestead and found the tools that had been used to open it. People were so very angry they wanted to burn her homestead, but I managed to persuade them to go to the police instead.”

Narrator of the story, Phakamile Ntuli, works for a SaveAct partner called Justice and Women (JAW) in Melmoth. She was also a member of the affected savings group but she managed to stay calm despite her anger.

The local induna was called in to mediate after it was found that the box-keeper’s daughter had stolen the money to please her boyfriend. He’d promised to use it to pay lobola and marry her. Instead he disappeared, leaving her family to repair the damage. The girl’s father promised to repay the money, which he did one year later.

Keeping large sums of money safe is one of the most pressing issues confronting savings groups, and a separate session was devoted to it at SaveAct’s annual partner’s meeting held in September. In a recent study commissioned by SaveAct that identified challenges facing savings groups, members pointed to the risk of the box—in which money and savings records are kept—being stolen or lost as their greatest threat. The study was done by Lakheni in Margate and Scottburgh in KwaZulu-Natal and 70 participants representing 32 SaveAct groups were interviewed.

“The box is vulnerable to theft and we’d lose everything. If it’s stolen, it would be over for us,” said one participant. Although members recognised that an alternative system is needed, and SaveAct recommends the use of banks, there is resistance to this because of charges. “The banks eat our money,” is a common refrain.

Banking is also not always an option, anyway, because of inaccessibility. Many groups are in deep rural areas and banks are too far away, while the journey by taxi to the nearest town is expensive and itself potentially dangerous. And so thousands of groups operate by keeping all the savings in a box that is locked with three keys and sent home with a designated keeper.

Although the danger of theft is more acute in the lead up to a group’s annual share-out, the stories told by different organisations at the meeting described a range of calamities that can befall a large sum of cash.

Destroyed by fire

Ntuli told the gathering about a box that was destroyed when the keeper’s house was burnt down. “The box and the money got burnt. The member called us from hospital and told us what happened,” she said.

“Her husband found the box in the ashes and when they opened it they found that the money was burnt. We went to the bank and they helped us.”

The burnt banknotes, representing thousands of rands, were deposited into the box keeper’s personal account and the bank replaced most of it, apart from a few hundred rands’ worth of notes that were damaged beyond recognition.

“Because of the dangers we encourage people to open accounts, but they are very reluctant,” said Jenny Bell from JAW. “It’s getting scary because poverty levels are rising and people are desperate. One woman in a stokvel—not one of our groups—was shot in the Melmoth area. It’s mostly women (who are) looking after boxes in rural areas and it’s mostly young men who are doing these things and are very violent,” she said.

Nomthy Mbonambi, SaveAct’s KZN project co-ordinator and regional co-ordinator for the KZN south coast, said her office shared stories of robberies and that encouraged people to open accounts. “Members want low or no bank charges, but the reality is that it’s better to pay charges than have money stolen. I’m glad we’re moving in that direction,” she said.

Nosipho Ndlela, SaveAct area co-ordinator for Zululand, said not all areas are resistant to having bank accounts. “When I introduced groups in the Eshowe area they all said they would use banks. We don’t have any groups working with a tin.”

Banking challenges

Banking, however, has its own challenges. Members can get complacent and drop their guard to the dangers closer to home. Ndlela described how in Eshowe a group lost R16 000 even though they had an account and believed they were doing things the right way.

At their first share-out they found that there was less money in the account than there was supposed to be. When they examined their records they discovered that the person entrusted with depositing the money each month had not deposited all of it and there were five missing receipts.

“The bank helped us and did a printout of the whole year’s transactions,” said Ndlela. “But the group was so disappointed because the woman who stole the money was the kind of person who always went the extra mile.”

At the partners’ meeting these stories prompted a vigorous discussion about what safety measures could be implemented. Suggestions included opening group accounts, adding new rules to the group constitution when opening an account, compulsory cell phone notifications to at least three members when depositing, keeping details of share-outs confidential, sharing out money in a safe place and, if possible, transferring share-out money electronically into members’ bank accounts.

For some groups finding a solution to the security issue has meant trying different approaches. Mdu Zungu from Thol’Ulwazi Uzivikele, a community development NGO based in Manguzi, described how, after an attempted robbery, people in one of their groups opened a bank account, but when it came to share-out time they withdrew all the money and took it to another venue to distribute to members.

“We said that wasn’t safe, and that next time they should rather do the share-out in the bank, which is what they now do,” he said. Another group opted for electronic payments with cell phone notifications.

One delegate also suggested that groups should align themselves with figures of authority in their areas. Anathi Jindela from Jabulani Rural Health Foundation in Eastern Cape described how when he mobilises in rural areas he uses traditional authorities. “If the chief and his wife want to join a group that’s fine, because it’s less likely that there will be a robbery.”

Wary of technology

Although digitization of the savings process might seem like the safest route to go, the study showed that many members, especially those that are older, are wary of this. One of the briefs of the report was to assess the need for a mobile application in streamlining savings group activities, and members raised concerns about their perceived inability to use and understand new technology.

“As an old person I will never be able to use these things (technology),” said a respondent. Focus group participants were also concerned that moving onto an electronic platform would mean that some group processes are hidden from the majority, with knowledge and access centralised to the few that are tech-savvy and some younger members of the groups.

Anton Krone, executive director of SaveAct, said the lack of access to mobile wallets and places to deposit and retrieve cash is a handicap in South Africa. “In many other countries, including Lesotho and Zimbabwe, mobile wallets or M-Pesa arrangements are in place. In South Africa, stringent regulation has inhibited M-Pesa’s development. We need to ask ourselves whether South Africa is over-regulated, at the expense of the voiceless?”

Krone asked if the poor and excluded are “paying the price for regulations designed for the wealthy or for banks. South Africa needs vigorous debate on these questions. Support for pilots under controlled conditions is essential.”

He said despite the risks the incidence of theft in savings groups is low, due to the relative cohesion and cooperation in these groups, and that the problem is more prevalent in stokvels. This was echoed by participants in the study, 80% of whom were members or had been members of community stokvels in addition to belonging to SaveAct savings groups.

“Systems around pay-outs are not clear and so you never know what is due to you. There is no transparency,” said one interviewee about community stokvels. Another said that “information is kept hidden and only one or two people know what is going on. The rest of the group is in the dark. Things are secretive.”

According to the study, “participants told multiple stories of being disappointed at the end of the year distributions (in stokvels) because they did not receive what they had expected.” Study participants agreed almost unanimously that SaveAct’s model was valuable because it is structured in a way that mitigates against the biggest pitfalls of community stokvel groups.”

Despite the perils that affect both savings groups and stokvels, Krone said these institutions are not about to disappear. “The recent FinScope survey for South Africa shows an upswing in the use of such groups, and their prevalence is set to be a major part of the financial services world for decades to come. Stakeholders need to come together to look for solutions.”

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