By TKay Nthebe
I am a big fan of mekhatlo because of the potential they have in helping individuals and households achieve their financial goals. For those who struggle to save, being a member of one can help instil a culture of saving, discipline, and accountability. For example, we have different types of mekhatlo in Lesotho, each with their own financial goals or objectives such as buying bulk groceries, covering burial expenses, birthdays, travel, and investments clubs.
I recently had a conversation with a client who is a member of a mokhatlo in Ha Matala, a savings club that has potential to achieve big financial goals if they have proper guidance and advice. In our discussion, I picked up that they have huge sums of money, deposited in a non-interest-bearing account, and do not know what to do with the funds. As with many other mekhatlo, the lack of financial literacy, knowledge about available financial products and guidance limits their potential to grow.
In this week’s article, I want to discuss strategies that mekhatlo should leverage on to grow and achieve their financial goals.
- Governance and registration
As a point of departure, mekhatlo need to have a constitution that outlines reasons why it exists, contributions per member, how membership subscriptions will be collected and where collections will be kept. It is also important to appoint a committee to oversee the operations of the saving club and a custodian (usually referred to a treasurer) to manage the finances. Mekhatlo can also register with the Law Office.
- Leverage on financial products available
Financial service providers (FSP) which includes banks, insurance companies, asset management companies and mobile money providers have developed tailored financial solutions for mekhatlo. This includes bank accounts (with online access), mobile money accounts, access to insurance benefits, and investments. Mekhatlo have an advantage because of the economies of scale i.e., number of members and size of contributions, making solutions more affordable. Similarly, FinTech companies have launched financial solutions with the aim of helping mekhatlo collect membership subscriptions conveniently, leveraging the power of technology. These solutions also encourage transparency and accountability amongst members.
- Develop growth mindsets and have an investment strategy
Traditionally, mekhatlo (depending on the type) collect monthly subscription fees from January until December, share and start over again in the new year. While there is nothing wrong with this; my concern, however, is that many mekhatlo in Lesotho are not fully taking advantage of their growth potential and remain small. Although not formally organised and regulated in Lesotho, the amount of money that flows through mekhatlo is significant. In South Africa for example, the estimated savings according to the National Stokvel Association of South Africa (Nasasa) is R50 billion per annum, with over 800 000 registered stokvels – this is huge!
Mekhatlo, collectively have the potential to build the economy, by investing in small businesses, developing infrastructure, buying, or developing property, thus increasing their income and creating employment. Let’s graduate from just being savings clubs and work towards building Leruo.
Lets’oele le beta poho! Kopano ke matla!