Bringing technology to Stokvels in South Africa with CAMS
Stokvels hold massive financial resources for the people in South Africa. Millions of people every year save money in Stokvels and avail loans for business and personal purposes. It is estimated that there are more than 8,20,000 Stokvels in South Africa with a total membership of 11.4 million people, handling over R44 billion per year. The stats clearly show how popular the Stokvels and other informal financial groups (IFGs) are amongst the people when it comes to offering savings and credit facilities. Here are some of the major benefits Stokvels offer to their members-
- Ability to save and invest money providing them with opportunities to invest in businesses, extend their houses, buy land and more.
- Ability to fulfil their basic needs and requirements such as food, clothes, medicines, and other daily essentials.
- Easy access to credit and small loans at reasonable rates to all participants to help them meet their personal needs and improve their quality of life.
- Promote savings and improve the living standard of women, contributing to women empowerment.
Current challenges
Stokvels play a critical role in improving the wellbeing of their members. However, they still face various challenges as they operate in this ever-changing digital environment. To find that out, Wakandi, together with Yellow Dot Africa conducted a feasibility study on 1097 members of Stokvels in South Africa. The motive of the study was to identify how they currently work and what challenges they face in day-to-day operations.
We found out that they still heavily rely on cash and manual processes for daily transactions. This means members of Stokvels give cash to the admin for savings and receive cash when they avail loans. Dealing in cash leads to a number of problems faced by such groups in terms of security, store of value, theft and more.
Moreover, it also makes it difficult to record these transactions (if not recorded timely and correctly) as no digital evidence is present. Human errors and fraudulent activities become more common in such scenarios.
CAMS for a solution?
As Stokvels continue to face such challenges in daily life, Wakandi aims to provide a solution through the Credit Association Management System (CAMS). CAMS is a financial inclusion system that can help thousands of Stokvels in South Africa to embrace digital technologies and make their operations smoother, safer and more efficient. It is based on Wakandi’s DLT-based financial infrastructure, a technology that provides a cheaper, safer, and more transparent way to make payment and share value.
With CAMS, Sotkvels in South Africa can improve how they work on a daily basis, bringing remarkable benefits to various processes including loans, savings, record keeping and more. It can open avenues for increased financial inclusion for Stokvels as every transaction can be done digitally and a proper record can be stored. It can give a sudden advantage to admins when it comes to managing daily tasks and recording transactions without making many efforts. As all data will be stored on DLT, no one could modify transactions to commit fraud. Moreover, it will also give a chance to Stokvels to connect with formal banking solutions, opening up doors to better financial services and raising the standard of living.
Launching together with Yellow Dot
We, at Wakandi, believe that CAMS can help solve a number of challenges Stokvels face, if not all. It can bring a transformational effect on how these financial groups used to operate. Abiding by our mission, we partnered with Yellow Dot Africa to deliver our innovative system. The system can be used by Stokvels in South Africa to offer better and technology-enabled solutions to their members. We also believe that the system can enable secure and real-time value transfers, reduce chances of fraud and raise the quality of life for thousands of Stokvels in the future.
Launching CAMS in South Africa will be our first step in our mission to digitize payments in African countries. We have also partnered with companies in many African countries to launch our system. Together, we aim to bring all informal financial groups under formal finance and build a completely cashless experience.