Rotating Stokvel Model for Entrepreneurial Success in South Africa: Validation of Constructs from a Case Study

Abstract

Stokvel is an African traditional credit system with initiatives that are typically situated in the informal economy and are easily accessible to alleviate financial challenges associated with micro and small enterprise financing, networking and product marketing. A wealth of research has provided an understanding of the entrepreneurial imperatives in this regard; however, knowledge of processes of setting up a successful Stokvel model to achieve this overarching benefit of scaling the initiative is still lacking. This study consolidates and examines the application and distribution of the model's four-building constructs established in a previous case study in a broader spectrum, providing requisite knowledge for its adoption in the contemporary entrepreneurial economy. Using a sample of 418 valid responses from the rural and urban areas of Limpopo Province of South Africa, findings reveal that the four building constructs (formation, operation, financial segment and disciplinary measures), are conformant to the study area, with no statistical evidence to support a difference between the ratings of the categories of location. This implies that Stokvel practices across areas of the province are similar, and a proper understanding of the building blocks that sustain its operations can enhance its applicability in other parts of South Africa, as well as other regions. The study, therefore, lays a foundation that can be used to develop a typical rotating Stokvel model for entrepreneurial success in Africa and beyond.

Citation

Iwara, I.O. and Adeola, O. (2023), "Rotating Stokvel Model for Entrepreneurial Success in South Africa: Validation of Constructs from a Case Study", Adeola, O. (Ed.) Casebook of Indigenous Business Practices in Africa, Emerald Publishing Limited, Leeds, pp. 183-201. https://doi.org/10.1108/978-1-80455-762-420231018