Transforming the R44 Billion Stokvel Industry

Episode 16 Tshepo Moloi – Founder and CEO of StokFella Transforming the R44 Billion Stokvel Industry

Episode 16

Tshepo Moloi – Founder and CEO of StokFella

Transforming the R44 Billion Stokvel Industry

How it all began

Tshepo was born in Soweto, Pimville. His mother was a teacher. He began his schooling in Soweto and later on transitioned to the so-called “Model-C” schools. He started his first business in Primary School, selling sweets – this could have been the first realization of his calling to business. He calls his Primary School journey the “Teacher’s Pet” days. Because of being good, he got some special privileges, i.e. getting out of class first, before other kids got out. Which afforded him the opportunity to sell his sweets before other kids sold theirs. In High School, he had another business. He realized his ability to write organized notes, writing them in a simplified manner. He packaged that into a mini document and sold it to other students. Those who bought his material did better in class. Those were probably the early signs of entrepreneurship.

He went to do a degree in Mechanical Engineering at the University of Johannesburg, which he finished on record time. His parents funded his 1st year varsity fees, and in 2nd year he got NSFAS. On his 4th year, he got a scholarship but had a loan to pay. Lucky enough, maybe because he read a lot in varsity, he had an incline of a bit of finance. He got to learn that he can’t leave varsity with a loan. The scholarship he got gave him pocket money, and he used it to pay off his debt before leaving varsity.

He also did a bit of tutoring, which brought in a bit more income. Tshepo is in support of the Fees Must Fall Campaign because he knows how difficult it is to pay for tertiary education. He did a bit of business in varsity as well. He started a marketing company called Campus Lives. They used to do marketing and promotions for companies. If people wanted to market their companies on any campus, they did it through them. They had a competitor at that point and time, but what made them different was that they gave the marketing companies strategy. They would develop a strategy and sell them the how, and got money through that.

People would approach them about what they wanted to do, and they will come up with ways in which they can come to campus and got paid for that. He learnt marketing through his good habit of reading – he put the library into good use. He also consulted marketing students and lecturers around the topic. So he was basically an Engineering Student, doing Business and Marketing. One thing we have to learn about varsity is that it is a world on its own, anything that you want and need is there. Varsity is the best place to test your concepts. If you are an entrepreneur studying in varsity, test your entrepreneurship there. It is probably cheaper and immediate. Facebook was started in varsity and it is one of the biggest IT companies in the world. You can learn and lose fast in varsity, in fact you have nothing to lose besides your sleep.

The risks are low because you are a student anyway, unlike when you have a car, house, family, etc. Testing ideas is much easier at that stage of life. Should he have figured it out and became an entrepreneur at that point and left Engineering? Perhaps, but academically, Tshepo loved Engineering – the rigor, problem solving, processing, number thinking, and the works. He went and did his Masters in Engineering and had a super professor who is also his mentor. He is proud of what Tshepo is doing and believes that engineers can solve any problems. The best advice he gave him was “if you want to be the best you must work with the best and you must be the best”. That’s how he goes through life. He challenges himself to be the best. You can’t compete with someone who challenges himself to be the best, you can’t compete with the man in the mirror. He challenges himself in the mirror each and every day when he wakes up.

Learning Campus Lives, Tshepo as an engineer student, was a bit wet behind the ears when it comes to learning about how the economics of the world function. It was in 2008 and if you are an economist or financial person, you would know what happened in 2008. It was what they call the subprime crisis – that’s when the market hacked. A lot of companies pulled back on their budget, and one of the first things they pulled back on their budget is marketing. The last thing they tried to pull back was jobs. Given that they were new in the game, they were about 2 years into the business. They didn’t have much record behind them, they were still building. So a lot of companies did not want to risk the ideas that they were coming up with. So they did not finance the work, they tried to test it.

Which was fair. So cash flow went down. That’s when Tshepo decided to put his engineering degree to good use, by going out there to get a job. So he worked for a Mining Engineering Consulting Company. What they did there was Operating Budget analysis and Capital Budget analysis.

The mining companies would consult them when they wanted to do some improvements on their infrastructure in order to get the analysis of the cost. So they used to model the cost. That was the first part of his working career. He then decided to transition and go work for a bank. The transition was not easy since he had engineering experience. He applied to all the banks and got rejected, then he decided to go via an HR company, which helped put his application in a manner that will cause the banks to see value in him. Nedbank gave him an opportunity, specifically their Pricing Strategy Team, known as the Client Value Management Team at the time.

They needed someone who was going to do the analytics and given the fact that Tshepo was good at modelling from his previous job, so he became their pricing specialist. The transition from engineering to financial services was painful. One thing he loves about academics is that it teaches you to think and apply yourself. In Engineering studies, you do more subjects, so you read more and do more in short space of time. The transition was that he could learn a lot in a short space of time. He remembers his senior manager at the time sitting him down and telling him that she wants to teach him how the bank makes their money, how to read a financial statement, and how to use a financial statement to determine the pricing. There was a lot of hours put into it.

Tshepo was literally applying what he had learnt in the book Ten Thousand Hours, where the author teaches that in order to be a professional at something, you have to spend ten thousand hours in it. We can challenge his theory and methodology, but what he is trying to say is that if you dedicate yourself, and you put those hours in, you are likely to be good enough to execute your mandate. So he was the first one to come into the office, and the last one to leave. He was an engineer in a team of guys who studied CFA and economics and had a lot of finance background. He had to understand the terminology and know how it works. He learnt fast and did so well that in two years he got promoted to run the whole pricing team. It is not impossible, but you have to put in the work. There is no secret except putting in the hard work.

Venturing into Business >> The Birth of StokVella

Tshepo then decided to go and be an entrepreneur, another challenging transition. He was in a space where he felt he wanted to get more out of life. And he realized that getting more out of life meant being part of a group of individuals who club together and put money together to buy property or shares. He tried starting one with his friends and it failed terribly. It is what this country calls Stokfels. The failure pushed him to find out how one can successfully do this. He got to realize that the reason why it failed was because administration was a big challenge. As a treasurer at that point and trying to lead, he used to call people to encourage them to pay.

When he looked back, he went back home to realize that there was a 25 year old stokvel which his family has been running and he had been part of and it was facing exactly the very same challenges. He realized that they as professionals were facing the very same challenges his parents were facing, and it didn’t make sense. As he went to one stokvel after another, he got curious and got to realize that it is the same challenges. Perhaps that’s the reason why stokvels have not evolved. So he figured, there has to be a better way of doing it. That is where the concept of his current business came about. The aim was to innovate and move this business from just being and old business and do it more digitally. Whereby you take that book that you have as a stokvel, where you write down your transactions and convert it into a digital platform and they manage it for you, they take away all that administration headache from you.

They have a platform to facilitate any stockvel. By taking that away, it helps you to focus on the objective and goals of the stokvel. In doing that, you are able to grow and move to the next level. When they looked at it and did research around stokvels they found that it is a 44 billion rand industry by 400 000 stokvels. A lot of stats in this country say that South Africans do not save. But the question is “If we don’t save, how can we have a 44 billion rand industry?” the answer was we save but we save differently. Then you ask yourself “but why? What’s the problem?” It’s because finance language is so complex, we need to water it down in some way.

When you dig deep you find that even professionals struggle with things like calculating interest. They figured that the reason why this 44 billion rand has not transformed is because of that. Even though you do financial literacy, there is something that we are not doing right. Or rather, there is something that the stokvels are doing right that the finance industry cannot understand.

There is also a high level of indebtedness in the country. About 70% of the income goes to debt. It comes back to the knowledge and understanding of what a credit card is and how to utilize it; or is it related to the Fees Must Fall; there are a lot of ways that comes back to the reason why people are in debt. And at the end of the day it comes back to the three biggest scary monsters that we have in this country, i.e. inequality, poverty, and unemployment. That is what we need to tackle. And how we go about tackling it is one of the basic skills that we need to give people is finance. Once you understand your finance that is when you can begin to tackle these monsters. Yes we need job creation, we need GDP growth, but the basic thing people need is to understand their finances.

What StokVella does

The first thing is that you have agreed on a common goal. For example, you agree that you want to buy property that costs R500 000.00 and each person will contribute R100 000.00 because there is five of you. You then create a group, the platform. Then you will sign up a deal, agreeing on all the terms and conditions. StokVella will then give you a standard constitution. By you putting all the information into the system, they are able to automate your admin for you.

They would remind you of meetings and payments. When the system reminds you, you can actually make payments on the system. The money goes into your account, which they FICA for you as well. When you claim, you can do it through the system. They would go through the mandates that you have put through the system, every executive would approve on the system the system will go ahead and claim your funds from the account. They are regulated to act on the mandate of the group. Once the fees have been raised, you are able to meet your goal, i.e. buy the property.

If you want to buy 5 properties, StokVella walks the journey with you and you pay them for their services. You can leave the money in the account for 5 years and ideally they give interests in the accounts. They are looking at ways of how to give you better value than just leaving the money in the account. Ways like linking you to the stock exchange so that you can buy shares. They are looking at way like using the money to fund other businesses that are already in existence in cases where they have cash flow problems; then those business can pay back with bigger interest. That is what they mean as driving the value from the StokVella perspective.

The most important thing is that they are trying to show stokvels that they can do more with their money – they have got value and power, not just to be a typical burial or groceries stokvel which is more focussed on consumption, but to actually change the economy of the country. To equalize those three pillars – using this 44 billion rand to build the economy of the country and destroy poverty, inequality, and unemployment.

Facilitating stokvels based in rural set ups

In an environment where the members of a stokvel are not tech-savvy, they can get one person related to them who is tech-savvy just to join the stokvel and drive it for them from where he/she is. That person can even capture payments for them through the “payments-on-behalf” option. Then they will get a reference via SMS informing them that their payment has been captured and they need to go pay cash at a retail shop. StokFella is linked to retail shops like Shoprite, Pick n Pay, and the like; through a service provider that they are connected to.

The Early Days of StokVella

The painful part of starting is that you need to prove it yourself – prove the concept yourself. Meaning that you have to put your money in it. A lot of people put business plans together and put pictures and then go out and pitch, hoping for funding of three million rand when they have not put even one rand of their own money. There is no way someone will give you three million rand if you haven’t shown value, if you haven’t shown that someone is actually willing to pay for the service. If they do fund you, maybe they see better than anyone else, but it is difficult for any investor out there to give money where they don’t see you put in your own money. The first part about early days is you put in your own money.

People looking to do business must learn to save before they venture. Some have way too much debt but wanting to start a business. There has to be a sacrifice. Tshepo sold his car and went for a smaller car and paid it off. He made sure that he went into business without car debt. That was the first decision he had to make – reducing cost. He was a property owner, so he moved out of that property because he realized that owning it causes him to incur cost. He rented it out and went to rent another affordable property. He went from making a loss of R6 000.00 to making a profit of R2 000.00 by just making that move.

He made sure that he sold the property for better value in order to capitalize the business as well. He made those painful decisions, painful in the sense that you have acquired these things and now have to let them go. He wished he had someone to tell him in advance not to buy those things in the first place – someone who could say try not to buy property that you live in because most likely, that’s not the place where you would end up; rather rent it out. The truth is that you can invest in shares, property shares if you really like property.

The second part is that he never left his job immediately. When he started StokVella, it was an admin tool. He didn’t know that it would convert into a transaction tool that it is now. The biggest challenge was balancing his job and StokFella. Luckily, he is a man that doesn’t sleep much, so he had late night. One thing that he always tells people is, don’t quit your job until you can show me that someone is willing to pay you a rand for what you are doing. So it was when he got the first rand that he knew he was going somewhere.  We can talk a lot but until someone takes out money, it means they see value.  And he knew that if someone takes out money, he can find the second person, and the third, and so on. He just needed to replicate. He needed to understand why a person gave him money and then find people like that person to give him money as well. So that’s the second lesson, don’t leave at least until you get paid. You need to see money in the bank, then you know that there is value in what you are doing. You might need to refine it along the way, but you are sure of the value.

Tshepo put his whole life savings in this business. Luckily they also went to a couple of competitions as a company and won themselves an enterprise development funding of a million rand. That is when he decided that it’s good enough for him to go full-time. At least there was now a bit of funding that would help them move, but he soon realized a million is not a lot of money. It may sound like it is a lot of money but it is not.

Advice for those looking for Funding

The first advice is that you start. Vusi Thembekwayo says “just start”. In one of his talks he gives a nice example where he says “imagine if you are driving up a hill and you saw a guy stuck and sitting in the car, would you stop and help them? But imagine if that person was pushing their car up the hill and it was raining and it was terrible and you were driving past, you are most likely to stop and help them”. As an entrepreneur, no matter how hard it may be, get out of the car and push it. Do the work and someone will see your commitment and stop and help you. Investors would rather fund something that has already started than something that doesn’t exist. So put in your own rand and get things going, so that when you go to investors they can see the commitment is there.

The two biggest lessons Tshepo can tell you is that know your numbers and know how to do story telling.

  1. The investor will want to know what his return on equity is. That is where knowing your numbers will help you. If you can’t tell them what their return on equity is, it will not work well for you. They want to know that if they give you R100 000.00 how much will they get back. They know they might lose it, but they want to know how much they are going make and how quickly are they going to take to make it back. They want to know the time value of money at the end of the day. So you need to know your numbers. People do not need to go study a Masters in Finance to know the numbers that the venture capitalist will require, they just need to know their business and know the profit they are going to make – by virtue, bringing an accountant in once a month or every quarter, they can impart the knowledge on to you. But you can’t assume that you will give your numbers to the accountant and therefore you know. When the accountant is doing the job, you need to practically learn from them. It is not a matter of just having the skill and not worrying about the numbers, you need the knowledge of the numbers. There are managers and then there are leaders. You need to be both as an entrepreneur. You can’t be either or at the beginning. You must do them both until you can afford to get someone who can do the managing for you, since you can’t delegate leadership. Part of being the manager is doing the numbers.
  2. Knowing how to tell a story helps you because how you pitch and how you present needs to be story telling. You need to take the people through the journey. In his pitches, Tshepo creates a persona based on the audience that he will be talking to. He creates a persona of the audience and of the client. Reason being that he wants the audience to understand the client and the audience to be able to see themselves in the business.

Another thing that he learnt is that people don’t buy products, they buy dreams and value – how they see themselves in it; what it does for them; how it changes their lives; what value it brings to their lives. Once you learn that also about business, you will see that money comes in once you are able to sell more than just a product. StokFella as a product is something anyone can do. What sets it apart is the value they add to their clients’ lives. When they use the app or their solutions, what value do they give them? Do they feel like we have added time value to them? Does it add confidence, in the sense that people are able to access and see that the chairperson did not run away with their money? Are we adding education value, in a sense that people who didn’t know how to calculate interest are able to see the interest added to their money? The reason why people pay is not because they like the product, they want value for their money. That is the reason why they choose certain product over other similar ones.

Fulfilling moments in business

  • One of the fulfilling moments is always with your end user. When someone is able to say how the product is adding value to their lives.
  • Fulfilment comes with knowing that you are changing people’s lives and making money out of it.
  • Another fulfilling moment is knowing that StokFella is leading how this industry is supposed to be functioning.
  • Trying to convince people that stokfels is not where you should be stopping. You should now be moving to the realm of becoming a corporative bank. Some of the most successful economics in the world are economics where there are multiple corporative banks. Meaning that there is a bank within the neighbourhood where people bank in the neighbourhood, e.g. Soweto could have their own bank. Stokvels need to realize that if they were to convert and become corporative banks, they would actually now start controlling the economy. The person who controls the economy controls the money. We are not saying there shouldn’t be other banks out there, but imagine if you wanted a loan you go to your own bank, where you know you set the rules of how much interest you should get, but you will not set the interest so low that you don’t get value for money you put in as savings. So you are also regulating yourself and will be faithful with your repayments as well because you know that, if I repay, I get my bank interest and the savings I have got. So the more corporative banks we get the better. StokFella is in the game of saying we need to transform stokfels into becoming corporative banks. A lot of them probably are already in that space, they just don’t have the tools or skills, or they just don’t know. So they are coming in to say, first let us fix the admin side of things and then turn the stokfel into a corporative bank and give you the tools you will need. They are now looking into building those tools so that by the time you convert you have those tools and don’t need to worry about capability of operating as a bank, you just operate.

The biggest thing about entrepreneurship is that you believe in doing a great job even though the fact is that not everyone will love what you are doing or see the value in it.


Learn how to tell stories, how to paint a good picture using your PowerPoint or using yourself, or the next person. Because, the better communication and storytelling you have, the more likely the next person will love what you are doing and you will succeed. When you are going to an interview, learn how to tell a story about yourself. If you can do that you will start to see more success. Numbers are important, but the better you can present yourself through storytelling, the likelier the next person will better receive you. Improve your communication. Tshepo challenges you to write a story about yourself and relate it to the next person. If you have a business, write a story about it and pitch it to the next person. And do it in less than 3 minutes.

Book recommendation

George Berkowski’s How to Build A Million Dollar App.

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