Expanding on the Stokvel Economic Advancement Model

Now the concept is nothing new really, I’ll grant you that, but it’s one which definitely needs a closer look, particularly with the view of possibly implementing it and effectively bringing it back to life. Of course I’m talking about what they refer to as the Stokvel economic advancement model way down at the southernmost tip of the African continent, South Africa. As I said, it’s nothing new, but perhaps a window into the past and how a group approach to economics and everything else in life really can help all parties who choose to get involved prosper.

Basically the model works on the principle that it takes a village to raise a child, which in itself is an old African proverb. Another term can be thrown into the mix, which is that of Ubuntu and that translates to humanity – albeit rather loosely. One South African by the name of Mark Shuttleworth took the term and ran with it, creating an open source Linux based operating system which he named Ubuntu and that just basically embodies what the Stokvel economic model is all about.

So what happens is that people with a common financial goal just get together, put their money together and seek to take advantage of the combined buying power they subsequently enjoy as a result. For the most part it’s very low-level financial goals which are targeted by the traditional stokvel, such as collective bargaining to get household supplies cheaper as a result of being able to buy them direct and in bulk, as well as financial goals like being able to cater to the very expensive wedding and funeral ceremonies as they play out in that part of the world.

This is what this particular post is about though – a look at expanding this economic model beyond its traditional format.

I mean just imagine if a bunch of people who for example wanted get into CFD trading or outright stock trading; perhaps even forex and other commodities, came together and decided they don’t want to make some already-rich broker even richer for facilitating the trades on everyone’s behalf and then charging a commission on each of those trades. Using the Stokvel approach, one or two of the members of this economic advancement group would be invested in so that they can go through the rigorous and expensive process of becoming a licensed broker.

Once they get accredited they would then proceed to open up their own brokerage, representing the group of course and go the full nine yards to offer an online trading platform. It’s no big deal these days as client-end software such as MetaTrader can be used, or some proprietary software can be developed exclusively for the economic group’s licensed brokers.

Now, with this in mind when the rest of the group decides to trade, the money which would have otherwise gone to the broker as commissions stays within the group and this is when you begin to see just how much money the likes of brokers as just one tentacle of the financial sector are making.

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Tim Spafford

Tim Spafford

Tim is a student who works hard to get a degree in finance and build a successful career in business consulting. Being a student and living in London Tim has a real-life experience in budgeting, saving, money making, traveling and having fun.
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