The Importance of Digital Finance for Financial Inclusion in South Africa

The Importance of Digital Finance for Financial Inclusion in South Africa
 
The Banking Association of South Africa defines Financial Inclusion as a development that improves the “range, quality and availability of financial services and products focusing on the unserved, under-served and financially excluded. Principles of financial inclusion include: access, affordability, appropriateness, usage, quality, consumer financial education, innovation and diversification, and simplicity.”
 
According to Bank SETA, 53% of the country’s adult population is unbanked. The reasons vary, including the fear of exploitation, an inability to access physical bank buildings, strict FICA requirements and the steep fees. But factors like the lack of trust in the traditional banking sector, concerns about safety and security, time, and convenience all contribute as well.
 
Digital finance provides solutions

South Africa has one of the highest mobile penetration rates in the world, with 87% of the population owning a cell phone. According to a report by The Guardian, “mobile phones carry huge economic potential in undeveloped parts of Africa.” The same article notes that a study conducted by the London Business School in 2005 found that the GDP rises by 0.5% for every additional 10 mobile phones per 100 people in a developing country. There is thus great potential for local and global economies to grow if enterprises are willing to tap into unbanked and under-banked markets and make digital financial solutions available to all.
 
Though the lower income segment may be financially challenged, they are comfortable enough with technology, and many mobile banking solutions companies are indeed using technology to reach this market. Traditional “bricks and mortar” establishments are often hard to come by, especially for the rural-based populace. Many of these digital finance companies provide an easy and accessible way to bank, where customers have no need for travel, all the while cutting through most of the red tape.
 
We’ll take a look at how companies improve the range, costs, access and availability of financial products in order to win the unbanked and under-banked sectors, making financial inclusion possible for the unserved, under-served and the financially excluded.
 

  1. Range
    According to the Bill & Melinda Gates Foundation, “The global revolution in mobile communications, along with rapid advances in digital payment systems, is creating opportunities to connect poor households to affordable and reliable financial tools through mobile phones, kiosks, and other digital interfaces.” Service providers can now reach this segment through mobile communications, and the poor in turn can now have access to these service providers. Today, the unbanked can make use of services that were previously out of range or not accessible to them. Companies in Ghana, for example, make access to life insurance cover possible for people in rural areas that are not familiar with or educated enough to know about the importance of financial products, like life and funeral cover. The process is simple: whenever an individual buys and loads airtime, they automatically get insured with limited life cover.

 
In Uganda we hear about local businessmen (fishermen, farmers) using their mobile phones to pay bills. These individuals in these communities are in actual fact creating a micro-economy by banking money on their phones and transacting with each other through these means.
The range of connection, access and opportunity expands exponentially with digital finance.
 

  1. Time and costs
    Mobile transactions save time and are much more convenient. People in rural areas no longer have to walk kilometres to get to a bank. There’s also no queuing in long lines or dozens of forms to fill in – and in many cases the poor are uneducated and unable to even complete these forms. Transactions via mobile are also much cheaper. Costs that would have been incurred should cash have been handled by banks are now cut out. We also find that exceptional products and new collaboration of services come to market through digital finance for the very purpose of saving time and costs whilst still providing a much-needed service.
  2. Access and availability
    Glen Jordan from financial services firm IMB believes it’s important to uplift South Africans with a stake in this country’s economic future. “It’s time to provide state-of-the-art financial solutions tailored to a market struggling with a financial inclusion. That’s one challenge we at IMB tackle with energy.”

 
Glen and his team believe the infrastructure exists, a sentiment echoed by the World Bank. According to a World Bank report, “South Africa’s highly-developed financial infrastructure, as well as mobile technology, provide opportunities for financial inclusion.” With South Africa boasting one of the best telecommunications sectors in Africa, and with the financial infrastructure as sophisticated as it is, there are ample opportunities for massive growth – making financial inclusion for the masses possible. By making digital finance available to a greater extent, access and availability are expanded to these markets. Products of service providers are now accessible to the poor, connecting people to one another on a local and global level.
 

SA Innovation Summit

SA INNOVATION SUMMIT

It’s that time of year again, when the SA Innovation Summit gives every innovator, inventor and unique creative thinker the opportunity to present their concept, prototype or product to the South African innovation world. That’s right folks, the Inventors Garage and SA Innovation Legends Pitching Den are OPEN FOR ENTRIES!

Inventors Garage

Do you have a working prototype or product from proven concept to early commercialisation? If the answer is YES, you are invited to enter the Inventors garage Competition! Do so online before 15 July 2016, and if you’re selected as a semi-finalist, you’ll be invited to showcase your product at the SA Innovation Summit’s exciting Market on the Edge. This will guarantee massive exposure, advice, mentorship and possible deal-making. A second round of judging will happen at the Market on the Edge, with the finalists going on to present at the Innovation Summit conference. Winners stand to win an overseas trip to meet international investors, R200 000’s worth of PR exposure, Match and Invest opportunities and much more! Visit
http://innovationsummit.co.za/inventors-garage-competition/
for all the information you need to enter your unique innovation and be seen by all the right people.

SA Innovation Legends Pitching Den

This Competition is open to high growth and start-up companies, and was designed to recognise those whose innovative tech-enabled solutions will have a significant impact on the growth of the African continent. Does that sound like your company? Do you have a unique IP or technology solution, and does your company demonstrate high growth potential?
Enter the SA Innovation Legends Pitching Den competition online by completing and submitting the application form. For all information on visit http://innovationsummit.co.za/sa-innovation-legends-pitching-den/ .
If you’re selected as a finalist, you’ll be invited to pitch your business to a well-rounded panel of judges at the 2016 SA Innovation Summit main conference. The overall winners will be announced at the SA Innovation Summit Award Ceremony and will stand to win an overseas trip to meet international investors, PR exposure worth R200 000, the opportunity for consultation, matching-making and acceleration, and more!
The SA Innovation Summit 2016’s Match & Invest platform offers a unique opportunity for South African entrepreneurs, investors, government fund administrators, foreign trade representatives and industry experts to meet in conversation and establish connections to take innovation from idea to market, accelerate growth and ignite business success in South Africa.
This is your chance to find your perfect match, whether in terms of sourcing capital, investing opportunities, providing and receiving expert advice, exploring new markets or meeting potential clients.
The Match & Invest event, combined with the other exciting events at this year’s Summit (e.g. Inventor’s Garage, Market on the Edge, Pitching Den), creates a perfect space where innovation role players can get right down to the job and get business done, without lengthy searches, numerous meetings, exploratory conversations and extended dealings.
The SA Innovation Summit’s focus for 2016 is on Innovation Acceleration. Match & Invest is your platform to accelerate your business!

Eskom to give small business a boost at leading business expo

Eskom to give small business a boost at leading business expo
Eskom is set to recognise leading small businesses, showcase promising SMEs and give entrepreneurship education a boost during the upcoming Small Business Expo at the Ticketpro Dome in Northriding, Johannesburg.
Through the Eskom Development Foundation, Eskom supports entrepreneurship and small business development at this leading small business event. At the Small Business Expo 2016, Eskom will announce the winners of the annual Eskom Business Investment Competition (BIC), in which substantial prizes aimed at building sustainable businesses are awarded to black-owned businesses in the manufacturing, engineering and construction, agriculture and agri-processing, services and trade industries.
The BIC finalists will also enjoy prominence at the event, where they will have an opportunity to meet with potential business partners, investors and potential customers.
“Eskom believes small business is the key driver of economic growth and job creation in South Africa. By investing in entrepreneurial education, training and the application of practical business skills from school level to eventually mid-sized businesses, Eskom aims to deliver maximum benefit through its entrepreneurship programmes and initiatives,” says Chris Bornman, Eskom Foundation Marketing and Project Manager.
“An important element of Eskom’s business development initiatives is its partnership with Small Business Expo. The expo’s focus is in line with the Eskom Development Foundation’s own goals – developing entrepreneurial skills and sustainable small businesses in South Africa, and connecting prospective partners in small business,” he says.
In addition to hosting the BIC awards and showcasing the finalists at the expo, Eskom will also feature leading Eskom Simama Ranta schools, in the new Blue Label Conference Centre during the Small Business Expo, who are shining examples of effective entrepreneurship education. As a show of its commitment to the growth of small business, Eskom will also provide an opportunity for black-owned SMEs to exhibit at the expo.
The Small Business Expo, staged by Thebe Reed Exhibitions, will be held alongside the #BuyaBusiness Expo at the Ticketpro Dome in Northriding Johannesburg from 8 -10 September 2016, daily from 9:00 until 17:00.
With different focus areas, the co-located expos will serve as a hub for all businesses, partners, investors and customers. Small Business Expo, in partnership with Eskom is devoted to the development and growth of small and medium enterprises by providing an opportunity for these businesses to market themselves and interact with corporates and investors. #BuyaBusiness expo will connect entrepreneurs and investors who are looking to grow, diversify or enter business partnerships with one of the many business and franchise opportunities to be showcased. Valuable information sessions, workshops and business networking opportunities will run throughout both expos.
SMEs interested in exhibiting at the Small Business Expo can contact Trevor Mochaki at Trevor@ThebeReed.co.za
For more information, go to www.smallbizexpo.co.za
 

uAfrica – an easy way to setup an online store in South Africa

ZApreneur spoke to Jenn Hattingh from uAfrica about their ecommerce offering. This is the start of a series of interviews on eCommerce in South Africa. What spark our interest was an initiative to assist new businesses to set up online stores, and a promise of support from uAfrica and bidorbuy.
Key Takeaway:  If you interested in setting up an online store in South Africa, uAfrica is running a competition. What I like about the competition is that every entrant gets a good value set of freebies including assistance in setting up a store, promotional credit on bidorbuy, and ability to test out their multichannel app for six months, free. And that is what the losers in the competition get!  View the competition details and enter now!

1. Hi. Please tell us a little about uAfrica.

uAfrica.com is a reseller for the Shopify eCommerce platform in  Africa. We have localised Shopify for the South African online business market by bringing South African payment gateways and shipping  functionality into the ring to help make Shopify even more accessible to local merchants.

2.Who runs the place? How long have you been around?

Andy Higgins is our MD, he founded bidorbuy back in 1999 and after  leaving bidorbuy started uAfrica.com.

3. Awesome! Why would a company use a service like uAfrica rather than say run a store yourself, using for example WooCommerce?

A shopping platform is a matter of personal preference but, being cloud based, we think that Shopify is a great solution for many South African merchants simply because they don’t need to worry about managing  things like servers, backups or upgrades. They can focus on their core business leaving the technical aspects up to the experts. uAfrica.com has > also built tools to localise Shopify in South Africa and we have negotiated special terms that allow us to charge our clients in ZAR for their monthly Shopify subscription fee instead of USD, so the monthly cost ends up saving  merchants a bit of money at the end of the day.

4. How does uAfrica work with Shopify?

We’re a strategic partner of Shopify and help spread the word around Africa about the benefits of having a Shopify store. Besides other marketing initiates we also run monthly workshop sessions, called MeetUps, to help merchants set up and manage their stores.

5. How does uAfrica work with Bidorbuy?

Andy, our MD, founded bidorbuy back in 1999 and the relationship has remained a close one ever since. We have built an integration into bidorbuy.co.za that makes it easy for merchants to sell across multiple channels.

6. I see you have a Multichannel app. What does it do?

uAfrica’s Multichannel service allows an online merchant to sell on multiple channels while only needing to manage inventory and orders on one ‘source’. For example, when a merchant places an order on their bidorbuy  channel, the inventory is updated on the Shopify source store, so you never > sell anything you don’t have. At the moment we integrate into Shopify and  bidorbuy but we are looking to broaden the offering as Multichannel grows.
The app also offers uAfrica Shipping which allows merchants to obtain > quotes from multiple couriers and then generate waybills, handle courier collection requests and track shipments with status notification updates to buyers.

7. As someone providing online stores, what reflections do you have of > the online commerce in South Africa?

South Africa is still behind the rest of the developed world with regards to adoption of eCommerce, however the sector is growing at around 30% per annum, albeit off a relatively low base. This compares to flat or low single digit growth of traditional retail so it is an exciting sector to be involved in.
With the advancements in technology such as hand held devices and better internet provision, the infrastructure available to shop online with ease is now available to South Africans and online businesses are starting to make the move online to reap the benefits.

8. What advice would you offer to a business owner wanting to start an online store?

The best advice we can offer is to just jump in! The best way to learn about how a platform ticks is to give it a try. Shopify offers a free 14 day trial where you really get to test the platform out and what it can offer. There are no limitations on the free trial either, so you can > really get into the gritty details and additional functionality that is available. A lot of new online merchants are nervous to launch because the site isn’t ‘perfect’, but if they’re not live, nobody is looking at their product offering and they’re wasting time and money. Think progress, not perfection.
uAfrica is running a New Business Competition for the duration of 2016 to help merchants get set up selling online. View the competition details and enter now!
Note: ZApreneur Media does NOT earn a referral commission from this article.

How to find out what funds are available to raise business finance

 
Research continues to show that one of the main reasons entrepreneurs fail to grow their businesses is due to their inability to obtain business funding. Yet, there are more than 350 different funds available to small businesses and many of the lenders are struggling to find businesses to fund. This disconnect between the availability of business funding and the ability of SMMEs to obtain funding is the problem that an innovative solution called finfind addresses.
Finfind is a unique, cloud-based Access to Finance portal sponsored by the Department of Small Business Development through its implementing agency SEDA. It provides a wealth of easy-to-understand information about small business finance and has a comprehensive database of active lenders that spans both government and private sector funds.
Small businesses can access this online solution 24/7 at no cost and are able to learn about the different types of finance and how they work and can be linked to a list of lenders that match their specific finance profile. Finfind has a team that continuously updates the lender database to ensure that the fund details are kept current at all times. Finfind has four main sections, this is how it works:
 

  1. Learn about Access to Finance  has a host of useful and easy-to-understand articles that explain how small business finance works. This is especially useful to entrepreneurs who are not familiar with financial investment terms such as equity and collateral or who aren’t sure how Term Loans or Invoice Discounting options work. Click here to learn about access to finance. 
  1.  “Find Lenders” section enables small businesses to see a list of all the lenders that can fund their businesses. Finfind has a comprehensive database of lenders (both public and private) and has mapped these to the eligibility criteria that applicants need to comply with. So this section asks the entrepreneur to register and then answer questions about the business owners, the business itself and the availability of the documents. If the SMME is finance ready (this means they have the necessary documents), then their answers are used to filter the database of funds, according to their eligibility criteria and find the ones that match their stated needs. When a user clicks on one of the loans in the list, a summary of the loan is displayed, details of the submissions and application process are available and full contact information is given. This makes it easy for small businesses to understand what finance options are available to them and what they need to do in order to apply for the money. Do you want to take out a loan? (See editors note below)
  1.  “Get Advice” section  helps link SMMEs to consultants who can assist them if they are battling to become finance ready or need help with their funding application. Finfind has partnered with SEDA (Small Enterprise Development Agency), SAIPA (South African Institute of Professional Accountants) and IBASA (Institute of Business Advisors South Africa) – all of whom have a comprehensive database of accredited consultants who can assist. SEDA branches provide subsidised support for small businesses, but SAIPA and IBASA consultants will charge for these services. The entrepreneur selects whether they want to use a subsidised or paying service and then selects their province and closest town. Finfind then displays the closest SEDA branch addresses and contact details or a short list of SAIPA or IBASA consultants in their area. Click here for advice. 

 

  1.  “Get Tools”  provides access to useful tools that can help SMMEs become finance ready. These include free online training videos to manage financial recordkeeping for startups and small businesses, as well as access to an online, easy-to-use accounting solution for entrepreneurs who don’t understand accounting. It provides quotes, invoices, payroll and complete small business money management including financial statement generation. Go to the toolbox

 
Finfind is easy to navigate and there is the additional benefit that SMMEs are able to repeat the finance readiness quiz and select different reasons why they need finance. This gives a new set of results and can be a useful means of identifying the most suitable business finance. For example, if a small business needs funding to commercialise technology, they will only see seven funding options.  However, if they were to select the funding option “To grow my business”, there are more than 50 funding options to choose from.
Small business funds vary considerably and it helps to understand that the reason why you need the funding, the amount, your industry sector and whether the business is profitable all impact on the number of funding options you’ll see.
Article written by
Robynne Erwin, Project Management, Finfind 
Contact Details  
Office: 086 176 3279
www.finfindeasy.co.za  |  Facebook |  Twitter
 
Editors Note: Small businesses should never enter into interest based loans with banks. I say this for religious reasons, but also because interest based financing makes a business less likely to succeed.  Finfind is an incredibly helpful tool, and we encourage readers to use the tool, and one of the reasons we are linking to the site is because it assists you to make informed decisions.