How It Works.

Day ONE can be utilised for savings purposes, credit purposes or both. This can be achieved by either using ASCAs only (for savings only), or ROSCAs for (credit only), or a selection of ASCAs and ROSCAs for both credit and savngs.

ROSCAs are Rotating Savings and Credit Associations, these types of stokvels are mostly credit leaning and rotate from one member to the next. ROSCAs are typically referred as umholiswano because the lump sum collected is given to one member instead of being saved in the stokvells pot.In other words, every member will have recieved the lump sum by the end of the rotation.

ASCAs are Accumulating Savings and Credit Associations, these types of stokvels are primarily for saving, particularly long term savings. Members contribute money regularly towards the stokvel pot. Once the stokvel reaches its end of life, funds are witdrawn and distributed back to the members as per their deposits. Since ASCAs possess funds on the continuous and regular basis, members can opt to take credit from the stokvel funds or their own funds, depending on the stokvel, this can incur fees and charges on the member thus resulting in profits for the stokvel when it reaches its end of life.

Day ONE Interest-Free Credit

All stokvels(ROSCAs and ASCAs alike) offer exclusive credit to their members at zero-interest. This subsidizes the credit and allows the members to do more even if their credit score is non-existent. Using the diagram above, we will go through how certain goods/assets can be acquired via stokvel credit.

Though stokvels are credit vehicles, they may not be used for the explicit purchase of perishables such as clothes etc. This line of credit is best used for goods that appreciate and are liquid. Depending on the stokvel, Day ONE executes the purchase on your behalf.

Here is how a typical transaction goes:

• You see what you want to buy
• You inform the stokvel members of what you want to buy
• You inform Day ONE of your pending purchase
• Day ONE distributes agreements,consents and acknowledgements to your stokvel members
• Once Day ONE recieves all agreements, consents and acknowledgements it will then execute the purchase
• You will then receive duplicates pertaining to the ownership etc
• Once you have paid out your credit in full, you will receive full ownership and accompanying original documents

Scenario 1(Car buyer)

When moving from point A to point B, Public transportation is usually viable and much more cheaper than driving there with your own car, except it is not always as clear cut as this. Due to several factors such distance, you might end up having to use 2 taxis just to get to work. This dramatically adds to your daily commute time and commute budget. If we factor in odd shifts than it immediately becomes clear that a car is a necessity.

Scenario 2(Property buyer)

There are possibly infinite reasons why a person would want to buy property or venture into the property business. We'd like to stick to some relateable ones such as buying property becuase you want to move out of your parents home or even for the sole puposes of erecting cottages. While most properties are sold for millions of rands, many more are sold for tens of thousand of rands and these properties are usually situated on urban peripheries, townships and rural areas

ROSCA Stokvels(How they work)

Using the figures above, you can now see that ROSCAs rotate among its members. There is no actual limit to exactly how many members one stokvel may have, however, it is best to exercise caution and restraint when considering members simply because the more members there are in a ROSCA stokvel-the longer it will take for the stokvel to reach full rotation. For context, if you create a monthly stokvel with 11 friends then it would take 12 months for every member to receive their rightful lump sum since there is only 1 lump allocated per month. Members delegate beforehand the order of the stokve(who goes first, second etc)

Paid Regularly(Without fail)

Stokvels are maintained regularly on the set intervals(Weekly,Fortnightly,15^th,Monthly) so it is best to treat them like informal debit orders. This rule applies to both ASCAs and ROSCAs. Stokvel admins can elect to impose late fees and other charges on late payments, partial payments and non-payments.

An Interest-Free Unsecured Loan

ROSCA stokvels are similar to an unsecured loan, with the exception that it is interest-free and your payment terms are equal to the number of members in the stokvel. So if there are 10 people(other than yourself) in your stokvel then you only have 10 months to make a payment every month for 10 months. This is also true for the other intervals too.

First One In, Last One Out

One of the biggest drawbacks of ROSCAs is the fact that once you are a member, you have to pay up until every member has recieved their lump sum. For example; if you are the 10th person in your ROSCA stokvel as per the admin, then you will be the last person to receive payment, however, you will be expected to pay every month up until you get the lump. This is not the same case for the members picked to receive first. Since they are at the start of the que, they get to receive their lump sum without much advance paying. This is why it is particularly important to be in a stokvel with people who are trustworthy and solvent.

ASCA Stokvels(How They Work)

ASCA stokvels are primarily for saving purposes but they do have an element of credit that isn't as full-blown as ROSCAs. As seen on the ASCA figures above; ASCAs do not rotate from one member to the other. Instead, money is pooled together by the stokvel members into one pot regularly(weekly,fortnightly,15^th,monthly). This typically goes on for 12 months and thereafter the funds are either redistributed to the members or used to buy perishables such as bulk groceries at the end of the year. ASCA stokvels are not confinded to just 12 months, they can go for even longer and it is all at the discretion of its members.

Credit in an ASCA stokvel is much more relaxed. In ASCAs you are either borrowing from your own funds or from the funds of the entire stokvel. Admins will have different credit regulations depending on the stokvel. The fees incurred on the credit can be added directly to that members lump sum at the end of the stokvel's life or they can be distributed equally amongst all members. When taking credit from the stokvel that is bigger than your gross contribution, you can expect to receive higher fees and more stricter payment terms, ultimately though the payment terms will not exceed the stokvel's end of life date.

The fees imposed on the credit can also be seen as a deterrence from wanting to disturb your savings goal since the stokvel is there to make you save money more diligently.

An Informal Trust

ASCA stokvels are similar to Trusts because they too pull money together, they have an ongoing balance and they too can acquire intellectual property on behalf of the members. Each member can be seen as director and shareholder of the stokvel.