FinTech could fuel Africa’s next big growth & jobs explosion
Issued by Irvine Partners - Jun 7th 2018, 14:35
The African continent is poised to experience its next big growth phase. While previous growth phases on the continent – which helped birth the ‘Africa Rising’ narrative – were fuelled by the continent’s natural resources and young population, this one will be driven by financial technology or fintech.
That’s according to Karl Westvig, CEO of Retail Capital, a company which specialises in providing funding to Small and Medium-sized Enterprises (SMEs). He’s got a point too. Africa has long been a pioneering force in fintech, with Kenya’s MPesa showing the impact of combining mobile and financial technologies.
That legacy hasn’t slowed down either. According to a report from Disrupt Africa, almost a third of funding raised by African startups in 2017 was in the fintech sector. Given the low number of people with access to traditional banking across the region, fintech could unlock the continent’s true economic potential.
Outside of Africa’s general fintech trends, Westvig has seen first-hand how powerful it can be in unlocking a business’ potential.
At surface level, Retail Capital has seen its traditional SME-funding business made more efficient through digitising processes. But for Westvig, fintech is about more than simply digitising financial service processes.
“Our definition of Fintech extends to building the digital rails which accommodate a seamless customer experience, from real-time application and approval to contracting electronically,” says Westvig. “Traditional lenders are improving processes by collecting and using data digitally and also automating processes, but unless they can do it at scale, in real-time with minimum fuss from the consumer, it isn’t really Fintech.”
Retail Capital has applied this definition of Fintech to its own partner model. This model has seen it team up with payment players such as Yoco, iKhokha, and SureSwipe to provide funding to their customers. This funding process, Retail Capital says, is fully integrated into the systems of these payment players so the customer has a seamless experience.
Doing so has allowed it to provide pre-approved offers, a real-time mobile application, a digital contract and same day disbursement. Moreover, Westvig points out, the model allows SMEs applying for funding to have a contract in as little as 30 seconds, “providing them access to funding that is not available from the traditional banks”.
So successful has this approach been that Retail Capital has attracted funding from three development finance institutions (DFIs), including Developing World Markets. While Retail Capital can’t put a specific number on how much each of the DFIs has invested, the average international funder is putting in between US$2-million and US$5-million per funder.
Further confirming Westvig’s conviction that fintech will have a major impact on Africa’s economy was the content at the recent AFSIC (African Financial Services Investment Conference).
Believed to be the largest Africa investment event taking place annually in Europe and one of the most important Africa investor events globally, this year’s them was “Fintech in Africa”. Given the high-level investment discussions which take place at AFSIC, this clearly demonstrates how much of a future fintech has in Africa.
But how can SMEs take advantage of this increased interest and acquire funding?
According to Westvig, one of the best ways to do this is for companies to prove interest in their business model from the continent’s mobile network operators (MNOs).
“The MNOs are critical to the success of Fintech and Financial Services in Africa as they have transaction information, mobile data as well as the rails to disburse credit and collect credit through the wallet,” says Westvig. “As the platform to get to the customer, they are constantly being approached by Fintech operators to tap into their network to provide financial services”.
Grab their attention, in other words, and you’ll find it much easier to bring funders onboard.
Working towards better data management
17/09/2019 - 11:31
Big data is seeing organisations becoming more mindful of aligning their data management practices with newer paradigms such as data lakes, elastic and cluster computing, and real-time data. As such, the cloud provides an environment capable of managing the volume and scale required to do so.
Clover, Milco merger puts 657 jobs on the line
17/09/2019 - 10:05
A total of 657 existing jobs will be on the line at Clover Industries in the next two years if the R4.8 billion merger between the JSE-listed dairy company and Israel-based Milco is approved by the Competition Tribunal.
Rhodes Food Group's turnover rises amid healthy international growth
16/09/2019 - 11:14
The international turnover of Rhodes Food Group, which makes Bull Brand corned meat and Bisto gravies, rose 13.4% in the 10 months to end-July, boosted by a weaker rand and exports of fruit snacks to the US.
The changing UX and CX landscape
13/09/2019 - 16:16
An exceptional customer experience (CX) builds a foundation of loyalty and trust. Similarly, a positive user experience (UX) encourages brand connections with people wanting to come back for more. And yet, local organisations must learn to embrace these more effectively to differentiate themselves from their competitors.
The role of the stokvel in the organisation
13/09/2019 - 10:14
South Africans are well-known for their participation in stokvel saving schemes where members contribute a fixed monthly amount that is paid out to a specific member on a specified date. Nicol Myburgh, Head of the HR Business Unit at CRS Technologies, says employers can integrate these payments into existing processes to make it safer and more convenient for those members.