Mukando also known as money clubs or rounds, is popularly known as stokvel in South Africa. Mukando is an informal savings pool or syndicate contributing funds in rotation. The contributions can be done daily, weekly, monthly, and so on. This effectively enables the members or participants to cash out lump sums after a certain period of time. The mukando concept is not unique to Africa alone; it is common in many parts of the world. Basically, mukando is taken as a means of saving money; that is true. However, some people might not realize that there are different types of mukando. That is why today is a good day to discuss the different types of mukando.
Rotational Savings Mukando
The vast majority mikando are done this way. The members or participants contribute a stipulated amount after every agreed period. This can be at the end of each day, end of the week, or end of the month. The specifications are up to what the members agree on. Then they will agree on the order of who gets their lump sum and when. Let us suppose that 4 people agree to monthly contribute US$50. This means each of them will get US$200 after every 4th month. It is that simple and can be instrumental in purchasing big items or making significant payments (e.g. school fees). It is a mechanism that helps you save money if you are undisciplined to do it solo.
Non-Rotational Savings Mukando
The principle is the same at the rotational savings mukando. As in, the members or participants contribute a stipulated amount after every agreed period. However, the members will get their individual lump sums after a long-haul agreed period. For instance, that can be after 12 months or even more. Let us suppose that 4 people agree to monthly contribute US$50. This means the total from the monthly contributions will be US$200.
By the end of 12 months, that will be US$2400. Then they will share it for each member to get US$600. What this means is that each member saved US$50 every month for 12 months. This type of mukando is a tool to discipline or condition one to save throughout the year. It is akin to having accountability partners that expect you to save as agreed.
A variation to this type of mukando is that after a while, the saved money can be invested. Another way can be to open a savings account with a considerable interest rate. The goal will be to multiply the money. In the end, the members will equally share the resultant amount. This is risky, though, so it should be considered with caution.
Grocery Mukando
This is another type of mukando which can be standalone or married with the rotational mukando. I have noticed that those who do the rotational mukando tend to do it. It entails the members contributing a fixed amount meant for purchasing groceries. The usual goal is then to share the groceries at the end of the year. During the year, the members can decide to purchase non-perishable items. Then the other items are purchased when the time to share draws nigh. This is usually done when some good deals emerge from retailers or wholesalers. People who do this usually rest assured their groceries will be covered up until March of the next year or beyond.
Investments Mukando
This type of mukando is about pooling monies together for a common profit-making cause. For example, it can be to put together the money to buy shares or a business. It could also be to start a business. Another common goal is to purchase assets that generate income. A noteworthy example is a group of 25 000 women in Kenya who raised US$1 million to construct a 5-storey apartment building. The building was opened in September 2018 to be rented by students.
The building can accommodate more than 400 students. This means roughly US$10 000 or more can be realized from monthly rentals. They planned to use the proceeds from that building to purchase 2000 acres (809 hectares) of land. Then the land would be apportioned to the 25 000 women to use it as they see fit. This is an example of how life-changing investments mukando can be.
Lending Mukando
This type of mukando can be an add-on feature to rotational savings, non-rotational savings, investments, and grocery mukando. Regardless, you can still explore it as a standalone mukando. It entails availing your pooled funds to people looking for soft loans. The model I recommend is one I once saw being used somewhere. The setup is such that members can borrow, and so can non-members. However, non-members can only borrow through a member.
This means the member will be the guarantor. Thus if the non-member fails to repay, the member will assume the debt. As for the percentage interests, they would have to differ too. The percentage interest for a member can be 20 percent monthly (which compounds if it spills into the next month). The percentage interest for a non-member would be 30 percent (which also compounds). It is akin to running a sort of microfinance operation.
There are several other tweaks to variations of these types of mukando. Some can start a mukando to serve as funeral cover for the members. There are infinite possibilities. Especially when you notice that you can blend two or more types of mikando, you realize the many options.
