I’ve recently finished reading a book called “The fortune at the bottom of the pyramid” which I highly recommend you read if you are interested in understanding the behaviour of mass market consumers and how brands can create literally make a fortune out of low income earners.
This reminded me of Stokvels that we have here in South Africa so I thought I would create the following infographic to give an overview of the size of the SA Stokvel market and the opportunity that this sizeable market realises for a company with the appetite and capabilities to go after it.
Unpacking the opportunity
The company who is able to provide a nationwide, fully integrated and automated mobile based stokvel savings and investment solution will gain access to a consistent income stream / fund derived from a stokvel cash pool estimated to be worth R44 billion.
How do you go to the typical person in the street and enable him/her to autonomously setup stokvels and their constitutions via either the mobile phone or online, invite members and enable them to securely deposit or withdraw micro denominations from an aggregated investment fund and then from an investment fund perspective, manage the multi-tiered stokvel accounts in a virtual and secure environment?
The institution who is able to answer this question effectively and be first to market, will inevitably secure and derive a consistent pool of income from a R40 billion sized pot which can be monetised through a variety of ways; from financial services (credit / microfinancing), co-operative lending and retail focused services.
Cranking the stokvel numbers
The money making potential of SA stokvels is illustrated below:
If the solution acquires a mere 500,000 stokvel members (roughly 4,39% of the stokvel market) contributing a minimum of R210 p/m within a 12 month period will realise an investment pool of R105 million.
That’s not a bad small chunk of change to work with from a market share of a little over 4%. Equally then, in order to realise an investment fund of R1 billion would require the activation of 5,000,000 stokvel members (roughly 43,86% of the stokvel market) contributing an average of R210 p/m.
There should be three key focuses / components of this mobile enabled stokvel solution:
1) Stokvel Management (mobile)
Supporting the onboarding and overall engagement process of individual stokvels and stokvel members (including relevant constitution setup and management). This element would be quite simple to build.
2) Assets aggregation platform
Implementing a cohesive mobi stokvel account aggregation strategy on the other hand is far from simple. There are of course key advantages—and challenges—involved in aggregating client (stokvel) financial data.
Let’s first define “asset aggregation”: Asset aggregation is the process of collecting and storing financial information from multiple sources in such a way that the organisation can effectively use it from a brokerage, accounting and reporting systems perspective. An asset aggregation platform should provide adequate controls to guarantee accuracy and consistency across source systems (including consolidated reporting and risk assessment).
There typically will only be a few company types in SA who can provide this type of solution e.g. banks, equity funds, stockbroking houses.
3) Point of Sale (POS) Integration
Enabling cash dematerialisation / materialisation at a retailers POS systems (it must be with zero transaction fee otherwise the solution falls lends itself to slow uptake). One could look at using the vehicle of airtime to disseminate the cash but the key consideration would be to have a retailer in play with a national footprint. The main reason would of course be around user identification – so biometric identification systems (finger) would need to be in play at the POS.
I imagine that a partnership of some kind between three companies would be required to pull this off. A technical and mobile marketing focused company to drive the thing, an investment house of some kind to manage the cumulative stokvel money and a retailer with a national footprint to aid in user identification (you are who you say you are) and with the scaling of the solution nationally.