Stokvel & Laybuy

Have you really wanted something and you did not know how you could pay for it? Has that customer come into your shop like a dog on heat for an item only to turn around and leave you empty handed? During the depression of the 1970’s various payment methods that were socially structured were greatly used in South Africa.

The 1970’s depression was caused by the high price and lack of adequate oil reserves in the country.  A restriction was placed on the hours cars could fill up with petrol and how much petrol one was allowed to use. The economic depression was made worse by embargos on imported goods by Western countries in an effort to force change in the South African politics. The world desired that SA change its political system from apartheid to democracy.  The country responded by looking for its own oil and this was found in Namibia and labelled Sasol. The people responded by creating their own like goods and devising ways to cope.

Most of the household budget was spent on buying petrol and the rest on food. Very little was left for clothing, shoes and other products that were needed.

The mothers and wives began a club for purchasing the food items they required and this became known as a stockvel. Stockvels was a form of saving and investment in a social member driven club. The members would contribute a certain pre-agreed amount on a regular, normally monthly, basis. On a certain date in the year it would be their turn to receive a lump sum payment. However during the depression this was not adequate so through ingenious bargaining the layby system was born.

With layby the producer of the article sought would take part payments as arranged until the item was paid off.  A customer chooses the item and offers to pay by instalment. The goods producer or retailer on good faith accepts the offer and does not add interest. The system is a great help to the poor in that they can then budget for the item until it is paid off. For the small retailer it is also of benefit as it keeps their shop afloat. Enough small regular payments can amount to enough on a regular basis. The system later was adopted by banks and became the method of in use by budget credit cards. The banks bought out the debt from the retailer.

Theuns Koekemoer an artist from Mossel Bay accepts laybuys on his works.

Initially the buyer will be required to make a deposit of up to 20% and enter into an agreement with the seller as to the amount of the instalments and the dates on which they are due. The layby will need to be paid off over a fixed period of time. A receipt of payment is kept as proof. Any item can be sold this way. One can cancel the agreement but a penalty fee is then payable. 

The seller will be able to deduct any losses caused by the item going out of fashion, becoming shop soiled or a drop in the price to sell it. The seller may also deduct any expenses that he or she incurred in setting up the agreement. The seller has to produce an invoice detailing all deductions and payments.

Businesses can only cancel lay-by agreements if the buyer defaults by carrying out one of the following

  • you’ve broken the agreement, for example, you failed to pay instalments
  • they are no longer trading
  • the product is no longer available and this is outside of their control.

Credit cards charge a compounded interest rate monthly which the poor can’t afford. A debt of R50 000 for a car on a credit can amount to R71100.27 at a rate of 12% interest over 60 months (5 years). The interest and charge portion of the deal will be over R16799.00. On the layby system the interest charge is lower and depending on the item cost sometimes not included.

In South Africa there are several companies still offering the layby system of purchase despite credit cards having taken over a lot of the business. Companies offering layby are

Company Website Product
Bradlows Furniture
Bradlow Morkels Consumer electronics
OK Furniture Furniture & flooring
Game Mixed
Lewis Stores Furniture
Coricraft Furniture
Pep Stores Furniture
Home Space Living, Bedroom and Dining pieces
Jam Clothing Furniture
The Fix Furniture
Jet Furniture
Pick n Pay Clothing Furniture
Theuns Koekemoer Artist Art

So why aren’t more companies using layby in South Africa? Well it once again points to the lack of knowledge as the CPA has limited the stores right to ownership and re-imbursement by imposing a to low penalty charge of only 1 % of the total cost if the consumer cancels the agreement. One needs take into consideration that the CPA has imposed a rigid accounting report system which is costly as one requires qualified accountants. Another cost to the company is the loss in resale and in storage of the item, as well as the item having become devalued by age. Companies can circumvent the law by stating NO REFUNDS


National Consumer Commission’s website (

Heather Malcomess

Traderz *

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