Creation of wealth is a widely published topic with relatively little contribution needed to fill the gap in literature. “But the poor man’s wisdom is despised, and his words are no longer heeded. … Nevertheless, the wisdom of the poor is rejected—his words are never heard”. How does one capitalize and learn how to create real wealth in Botswana. Strategies of acquiring real estate for those that do not qualify for traditional financing options like mortgages are explained in this article.
ROSCA – A Rotating Credit and Savings Association (ROSCA) is an alternative financial vehicle in which a group of individuals fills the role of an informal financial institution. This happens via repeated contributions and withdrawals to and from a common fund. ROSCAs are most common in developing economies or among immigrant groups in the developed world. In an ROSCA, members pool their money into a common fund, generally structured around monthly contributions, and single members withdraw money from it as a lump sum at the beginning of each cycle. This continues for as long as the group exists. An organizer might establish a ROSCA in the event that she or he requires a lump sum of 100 000 Pula to build a low cost house. In this case, the ROSCA organizer could gather nine trustworthy individuals and task each of them to contribute 10 000 Pula to the fund per month. At the meeting’s conclusion, the organizer would take home a lump sum of 100 000 Pula. In the second meeting, another member would take home the next 100 000 Pula. This would continue until everyone has a turn with the proceeds. If meetings are held monthly, the ROSCA would last 10 months, after which it would disband.
ISLES – Internal Savings and Lending Schemes (ISLES) serve a variety of community needs. ISLES have both economic and social functions. While the primary objective is usually to achieve the group’s financial goals, ISLES meetings can also provide opportunities for eating, drinking and networking. In Cameroon, ISLES are similar to ROSCA which are called djanggi, and participants exchange greetings and share kola nuts while drinking occurs after the meeting has concluded. In Zimbabwe, ISLES are commonly popular amongst all and are referred to as raundi in Shona, – easily translated a round or circular shape symbolizing a function where each point is reached in an equal and fair way. The agenda for formation of clusters in an ISLES is basically encored on the principle of four Cs which are composition, co-operation, coordination and communication and popularly used in housing constructions for group members. The difference here with ROSCA is that when the ISLES group has enough financial resources, it can borrow the money to the members who will use the money to build their real estate assets. The returns from investment in the form of rentals can then be used to pay back the borrowed money from the group. When done repeatedly and diligently, one will complete their payments and remain with the real property. When done on many platforms, one can simply end up owning many real estate assets hence accumulating in wealth.
In Botswana and South Africa there has been plenty of talks around Property Motshelo or stokvel, drawing from the commonly known, credit, furniture and groceries metshelo that aid households to purchase in bulk or access funds to but furniture they could otherwise not afford. The tricky adjustment is moving from a monthly P 500 contribution to a significant P 10000 contribution. This leap is generally possible for those with low commitments and high income levels. However, a commitment to building your wealth dictates a higher level of determination and sacrifice.
If the idea is to buy the typical low cost BHC house costs P 600 000, for a 10 member motshelo a total of P 6 million is needed. If a monthly contribution of P 10 000 is agreed upo, in an interest bearing account. Each year the motshelo will be able to buy at least 2 houses for the members and in year 5 all members will own mortgage free homes.
So yes it is possible you just need to want to do it enough.
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