Financial Economics

  • Collective Authors


While immigrants are at liberty to start self-help financial associations (referred to as
stokvels in South Africa) to cater for their unfufilled need for capital, the benefits of this laudable
effort are seldom maximised due to a number of shortcomings. Aim: This paper seeks to ascertain the
operational obstacles that immigrant-run stokvels face and to suggest solutions accordingly. Method:
Aiming to complement each other, quantitative and qualitative research approaches were utilised to
conduct this study. Quantitative and qualitative data were collected through a self-administered
questionnaire and one-on-one in-depth interviews. Purposive sampling technique was employed to
reach the 123 participants who responded to the survey questionnaire and the 10 that took part in oneon-
one in-depth interviews. Results: The typical immigrant African entrepreneur who participates in
a stokvel, is a married male between ages of 30 and 46, and is fairly educated. While most of the
respondents conceded that their stokvels faced operational problems, they also noted that the default
on loan repayment and unskilled personnel on the loan management team were the issues of a greater
concern. Hence, providing training and practical management skills becomes paramount to the
smooth functioning of these stokvels. Uniqueness and implications: Though presumed to be a
possible source of finance for immigrant-owned businesses, most studies have not explored the
operational challenges that stokvels in South Africa face. The lessons drawn from this study may be
of benefit to the respondents, policy-makers and academics.


Adeusi, S.O. & Ibitoye, O.A. (2014). The problems and prospects of informal financial institutions in
financing agricultural sector in Nigeria, Banking and Insurance e-journal, 6(32), 1.32.
Adeusi, S.O. & Ibitoye, O.A. (2015). Evaluating Sustainability of Microfinance Institutions (MFIs)
Through Effective Accountability. International Journal of Banking, Finance, Management &
Development Studies, 3(1), pp. 1-22.
Asoba, N. & Tengeh R.K. (2016). Analysis of start-up challenges of African immigrant-owned
businesses in selected craft markets in Cape Town. Environmental Economics, 7(2), pp. 97-105.
Aredo, D. (1993). The informal and Semi-informal Financial Sectors in Ethiopia: A study of the
Iqqub, Iddir, and Savings and Credit Cooperatives. African Economic Research Consortium, Paper
No 21.
Aryeetey. E. (1998). Informal Finance for Private Sector Development in Africa. African
Development Bank, Economic Research Paper, No. 41.
Beeior, C.T.; Ajegi, S.O. & Tyoakosa, J.A. (2016). Informal Financial Institutions (IFIs) and Poverty
Reduction in Konshisha Local Government Area of Benue State, Nigeria, Asian Journal of Social
Sciences and Management Studies, 3, pp. 82-90.
Buijs, G. (1998). Savings and loan clubs: Risky ventures or good business practice? A study of the
importance of rotating savings and credit associations for poor women. Development Southern Africa,
15(1), pp. 55-65.
Chipeta, C. & Mkandawire, M.L.C. (1991). The informal financial sector and macroeconomic
adjustment in Malawi. African Economic Research Consortium, AERC Research Paper, No. 4,
Desiderio, M.V. (2014). Policies to support immigrant entrepreneurship. In Open for Business:
Migrant Entrepreneurship in OECD Countries. Paris: OECD.
Fairlie, W.R. & Lofstrom, M. (2013). Immigration and Entrepreneurship. USA: Institute for the Study
of Labor. Retrieved from
Fatoki. O. & Chindoga, L. (2011). An investigation into the obstacles to youth entrepreneurship in
South Africa. International Business Research, 4, pp. 161-169.
Fatoki, O. (2014). The financing preference of immigrant small business owners in South Africa,
Mediterranean Journal of Social Science, 5(20), pp. 184-189.
Kalitanyi, V. (2007). Evaluation of employment creation by African immigrant entrepreneurs for
unemployed South Africans in Cape Town. University of the Western Cape, Cape Town. Unpublished
master thesis.
Kalitanyi & Visser, (2014). Migration and Migrants Entrepreneurial Skills in South Africa: Assets or
Liabilities? Mediterranean Journal of Social Sciences, 5(14), pp. 147-159.
Khosa, R.M. (2014). An analysis of challenges in running micro-enterprises: A case of African foreign
entrepreneurs in Cape Town, Western Cape. Unpublished master`s thesis. Cape Peninsula University
of Technology, Cape Town.
Lee, R. (2009). African women and apartheid-Migration settlement in urban South Africa. Tauris
Academic Studies-London.
Matuku, S. & Kaseke, E. 2014. The role of stokvels in improving people's lives: The case in orange
farm, Johannesburg, South Africa. Social work, 50(4), pp. 504-515.
Porteous, D. (2003). The demand for financial services by low income South Africans.
Milica, P. & Benton, M. (2013). Beyond Integration: Updating Services for an Age of Super-Diversity.
Washington, DC: Migration Policy Institute. Unpublished.
Moliea, H. (2007). Stokvels as Alternative Micro finance Institutions. Conversations with Women
from Venda. MBA Project submitted to the University of Pretoria, Pretoria.
Rogerson, C.M. (1997). International Migration, Immigrant Entrepreneurs and South Africa’s Small
Enterprise Economy, Migration Policy Series No. 3, the Southern Africa Migration Project, Cape
Saunders, R.K.; Lewis, P. & Thornhill, A. (2009). Research methods for business students. Cape
Town Prentice Hall.
Seibel, HD. (2001). Informal finance: origins, evolutionary trends and donor options. Journal of
Developmental Entrepreneurship, 6(1), pp. 83-95.
Sekaran, U. & Bougie, R. (2013). Research Methods for business: A skill –building approach. 6th
edition. Chichester: John Wiley & Sons Ltd.
Tengeh, R.K.; Ballard, H. & Slabbert, A. 2011. A framework for acquiring the Resources vital for the
start-up of a business in South Africa: an African immigrant`s perspective. European Journal of Social
Sciences, 23(3), pp. 262-381.
Tengeh, R.K.; Ballard, H. & Slabbert, A. (2012). Financing the start-up and operation of immigrantowned
businesses: The path taken by African immigrants in the Cape Town metropolitan area of
South Africa, African Journal of Business Management, 12(6), pp. 4666-4676.
Tengeh, RK & Nkem, L. (2017). Sustaining Immigrant Entrepreneurship in South Africa: The Role
of Informal Financial Associations. Sustainability, 9(8), pp. 1396-1412. doi:10.3390/su9081396.
Verhoef, G. (2001). Informal financial service institutions for survival: African women and stokvels in
Urban South Africa, 1930-1998. Enterprise and Society, 2, pp. 259-296.
Yusuf, N.; Ijaiya, G.T. & Ijaiya, M.A. (2009). Informal Financial Institutions and Poverty Reduction
in the Informal Sector of Offa Town, Kwara State: A Case Study of Rotating Savings and Credit
Associations (ROSCAs). Journal of Social Sciences, 20(1), pp. 71-81.