GROUP SAVINGS/ MOTSHELO FOR YOUR SAVINGS

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GROUP SAVINGS/ MOTSHELO FOR  YOUR SAVINGS


Group saving schemes commonly known as Motshelo/ stokvels are a huge part of our African families. Members of Motshelo are usually very familiar with each other. They are either from the same place of work, worship, street, village or even family. Our mothers, fathers, brothers, sisters, and uncles are part of group saving clubs. Motshelo schemes empower its members and are highly present in rural areas as they are in urban areas.


 WHAT EXACTLY IS A GROUP SAVING CLUB/ MOTSHELO CLUB
Motshelo is a money saving scheme where a group of people voluntarily come together to meet their economic and social needs as well as future spending desires. Often a small group comes together for the mutual benefit of saving. Motshelo clubs/schemes are special because they are not one size fits all and outside forces cannot dictate the perfect Motshelo model.
WHY PEOPLE JOIN MOTSHELO CLUBS
People join Motshelo clubs for various significant reasons, some of which are that:
  • They get to save money and avoid going to financial institutions.
  • They get to supplement their limited earnings.
  • Access to credit is simple and loans at Motshelo clubs are given at lower interest rates and are available when ever needed. Group members are responsible for the approval of loans looking at each member’s capacity to pay. Short term loans are given to members without any need for collateral, bank statements and a lot of paper work which are demanded by most financial institutions. Hence members get financial help sooner when in need.
  • Those with the wish to become entrepreneurs get a chance to save up money for their businesses and strengthen business skills through regular interactions with other members.
  •   Capital remains within the club and hence the interests paid on loans remain within the group and builds the cash assets of the members.
  •   Group saving schemes offer a platform for economic creation and promotion, increased food security as well as asset ownership. 
5 CHALLENGES FACED BY GROUP SAVING CLUBS/MOTSHELO CLUBS
  • People borrowing and not paying back the loan is one big challenge. Members can exploit the loan fund by taking more than they can afford and end up defaulting on payment .Even with well-set repayment policies and signed paper work, people default on payment and it affects the motshelo club as it costs them to follow up on the payments.
  • Interrupted savings due to members with irregular income, economic shocks and household emergencies result with members defaulting on monthly contributions.   
  • Badly managed groups, poorly established structure or rules, or limited perceived value by members result in inactive and unsustainable groups.
  •   Low literacy levels and people are intimidated and reluctant to use formal financial services.
  • Theft is also a big challenge as money is held by the groups and may pose a risk of theft as most Motshelo clubs do not bank. Theft can be by members of the groups themselves or thieves with inside information about what is happening in the Motshelo club.


GROUP SAVING MODELS

 MOTSHELO SCHEMES:
          •SAVINGS CLUBS
•BURIAL SOCIETIES
•ROTATING SAVINGS
•HOUSE BUILDING CLUBS
•HOUSE IMPROVEMENT CLUBS
•SHORT TERM LOANS
•SCHOOL FEES CLUB 
•BULK BUYING(YEAR -END GROCERIES)
 
         Savings Clubs:Saving clubs are usually time bound and run for about 12 months .Each member gets  to contribute which is usually monthly basis.When the time comes usually in December,part of the accumulated savings and loan profits are shared by members according to the amount saved .After each share-out ,they reform and start another cycle of saving and borrowing hence allowing funds to grow.


 
         Rotating/Rotational Savings:With his type of Motshelo ,each member gets a chance to receive a lump sum of money on a pre-determined basis.Each member eventually receives a large payout.

  Bulk Buying: Year- End- Grocery- buying is one of the most common schemes.From January members start contributing money for groceries..In December members will go buy groceries in bulk or each member is given money individualu to buy groceries
  
We all belong somewhere.Find your tribe ,find those who  you can grow with financially.Different reasons bring all of us together...save,invest and grow side by side.