Implementation Plan

The synthesis of meaning shows that there is an opportunity for an institution that provides financial education, brokers the relationship between stokvels and financial services providers as well as linking up stokvels in mentoring relationships. It is this idea that encouraged this business model to emerge. The business model, in a nutshell, is a financial wellness and wealth management institution for stokvel. However, in order to successfully deliver this business model an

106 implementation plan is required in order to place all the different elements that are needed to make it effective. The following six steps are key in making this new institution successful.

1. Create a financial education program that will enable stokvels to progress, financially. The financial education that progresses stokvels forward is not one that prioritises knowledge of key finance terms as well financial products. It’s actually seeing, reading or hearing about the financial activities and successes of other stokvels as explained in Theme 3 of the findings section in chapter four. Therefore, a peculiar and particular financial education program is required that is designed specifically for stokvels. To develop this, a Stokvel Exchange event will be organised that fosters information sharing between different types of stokvels. Through ethnographic research, those exchanges can then be captured into a format that is scalable for other stokvels. This Stokvel Exchange will be different from what NASASA organises because the event organised by NASASA is focused on NASASA educating stokvels about who and what NASASA is so that they can become members of NASASA. It is an event where NASASA gives stokvels information. This would be different because it will be designed around creating an enabling environment for stokvels to give other stokvels information. Therefore, an event is needed where stokvels educate other stokvels on investing.

2. According to the findings in Theme 6, there was a shift in thinking that occurred by just exposing stokvels to their R44 billion economic power. Therefore, as part of the knowledge exchange process, educating stokvels about their collective power is important to help them see that working together is a beneficial activity that they should strongly consider. From their place of seeing their collective power, that kind of thinking that can be leveraged to introduce them to collective bargaining. Forming a collective bargaining network with stokvels will allow stokvels to still spend as they require but through discounts, they spend less and get the same quantities they require. Capital can be freed up, which can then be invested in assets or other income generating vehicles. Therefore, similar to the American business, Groupon, that uses its membership base as a mechanism to get a high discount on certain products from various retailers. One could think of it as Groupon for stokvels. One of Groupon’s challenges was that they are unable to guarantee that customers who use their discount network will be repeat customers. However, in this case, stokvels are already annual spenders, so they will by default be repeat customers and therefore increasing the likelihood of the business succeeding.

107 3. Educate stokvels about SMMEs and their potential impact on the township economy. Allowing stokvels to start to envision a community where local SMMEs are pivotal in changing the status quo of the community. Once they believe in the power of SMMEs, we will then start introducing them to cash investments that they can make, which are fairly low risk with good returns such as funding purchase orders of SMMEs. Cash investments are investments that are made in current assets or liabilities. These are, for example, short term loans that are repayable in the same financial year or longer-term loans that are sold off to another service provider in the same year. SMMEs’ business models provide a number of avenues for low-risk cash investments to be made by stokvels. However, ensuring the risk taken by stokvels is as low as possible is important in this area.

4. Build a repository of financial services providers and services that will truly benefit stokvels and start educating stokvels about the benefits of financial service provider’s offerings and how the stokvel benefits them as a group. Furthermore, showing them how the different product in the market compare, therefore, enabling them to make a better-informed decision. This will improve the probability of stokvels interacting with credible financial services providers and avoid them falling into scams. Theme 5 showed that working with credible organisations is important for reinforcing the stokvel group’s mindset about investment. It’s very difficult for a stokvel that has had bad financial dealings or has members who have had bad financial dealings to start or even think about investing again.

5. Broker the relationship between financial institutions and stokvels because the research shows that stokvels and financial institutions are disconnected and therefore ‘don’t speak the same language’. Having spent so much time with stokvels (and intending to spend more) and with my experience and knowledge of the financial services sector, I, through the proposed business model, can act as a broker between the two bodies to ensure that there is alignment and understand in thinking. Theme 4 discussed how there is currently a big disconnect between banks and stokvels. Banks offer a very basic service offering to stokvels. Most stokvels indicate frustration with the banking system and from my analysis, the frustration is also due to not fully understanding how banks work.

6. Introduce stokvels to a sustainable solution that allows them to invest in their communities, connect and learn from other stokvels as well getting discounted purchases for their consumption needs. That solution is the envisioned business model for working with stokvels

108 going forward; a Wealth Management Solution for stokvels by stokvels. My vision is that stokvels would start seeing themselves as fund managers whose aim is to feed their families as well as create a financial return for their organisations. The solution would tie together all the six themes, giving stokvels a platform to enjoy economic mobility through their participation in stokvels.

Figure 23 shows how the implementation plan could be facilitated over a twelve-month period. Although the steps are shown as linear, an iterative and agile approach and thinking should be utilised. The outcome of the twelve-month period would be a Stokvel Wealth Management Solution that is designed by stokvels for stokvels. Furthermore, the solution would take into account the motivation profile and risk profile of the stokvel. The motivation profile is important because the research shows that stokvels are ever changing entities that are reflective of the motivation and needs of their members (as discussed in chapter four, theme one). These motives, furthermore, inform how the groups perceive and tolerate risk. Therefore, the motivation and risk profile is key to the success of the system. In order to execute the implementation plan, an initial investment would be needed. Please see Appendix C for more details of the financials. Furthermore, the development of the Wealth Management Solution would be a consequence of key outcomes of a continuous engagement with stokvels over a twelve-month period.

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Figure 23 Implementation Plan

Three tests were conducted to ensure that there is a market appetite and interest for a wealth management solution for stokvels. How this was done is that I went back to three of the stokvels that were research participants with a lean canvas business model shown in Appendix A. The idea was to understand from them if they would pay for such a service and if so how much. The three stokvels selected for this engagement where a township stokvel, rural stokvel and urban stokvel. The aspects that the stokvels liked on the business models where:

• Recommendations from a neutral body regarding what products and services could be beneficial to them, especially relating to investments. The one group was made of professionals and they wanted to start investing but they were not sure what to invest in and what was best for them. This idea was very well received by the urban stokvel. The township stokvel saw the feature as opportunity to avoid scams through the advice given; • A new portion that emerged was that the urban stokvel felt a need to give back to the

110 a stokvel form a township or rural area. In fact, one of the stokvels started contacting rural stokvels and making themselves available for such advice. This was something that I warned them against after I found out saying to them that it is probably best not to take that step because there might be challenges in future if something goes wrong. Furthermore, in South Africa, financial advice should only be given by a financial advisor, so the legalities of their actions might have legal and socio-economic consequences.

The negatives were:

• The idea of pulling money together was not liked by rural and township stokvels. They saw that this could cause fights and therefore ruin relationships

• Both rural and township stokvels did not see why they should pay for the service

Therefore, from those engagements, it was clear that more work is needed to come up with a solution to these challenges. The implementation plan will, therefore, gives the time to craft a solution by stokvels for stokvels. Finally, the last discussion regarding this research that was held, was with Andile Fulane, CEO of Seeds of Prosperity. Seeds of Prosperity has been in the market of financial wellness for close to 10 years and they have been providing financial education to stokvels since 2009. His vision as CEO is for the company to become a premium and leading provider of financial education for stokvels. However, he did state that the current content that they use is not content that was created for stokvels but is general and good financial education content which is beneficial none the less. Discussions with him confirmed that an implementation plan as outlined is best with the business model coming thereafter.