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Merger enables SMEs to access funding more speedily – Miguel da Silva

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Miguel da Silva, managing director of Retail Capital Group’s Funding division.

CAPE TOWN – Small to medium enterprises (SMEs) are critical to the growth of our country’s economy. It’s estimated that SMEs contribute over a third (34 percent) to the country’s gross domestic product (GDP) and make up roughly 90 percent of South African formal businesses. But considering it is growing at a mere 1 percent, there is a clear need for investment into this vital sector.

But for this to change, the way small businesses apply and access these funds needs to become more efficient.

Even though government committed R1.5 billion into a Small Business Fund last year, the reality is that this needs to be shared among more than 2 million SMEs. More is needed to make a real difference to the economy. As a corollary, the reliance on private lenders has increased significantly.

In a move designed to provide its small business customers with the means to access additional funding in a challenging economic climate, international cloud-based accounting platform Xero has partnered with  three of South Africa’s leading digital lenders – Bridgement, Retail Capital and LulaLend.

Access to funding, especially when it comes to supporting increased stock levels, new locations and new channels to customers, is a business imperative for SMEs. The agreement between Xero and the three digital lenders aims to address this.

The agreement allows customers to contact these lenders from within its platform. In turn, the lenders will be able to access financials from applicants immediately, speeding up the approval process and removing the need for cumbersome paperwork.

“We want to help South Africa’s small businesses thrive by removing the friction involved in accessing funds,” says Colin Timmis, General Country Manager, Xero SA. “A lack of capital is one of the biggest challenges impeding small business growth in this country so by integrating the latest business finance apps with Xero, SMEs will have better accounting data, which can help them access capital.”

Launched in September 2016, Bridgement identified a gap in the local market to provide short-term financing solutions for SMEs. The company empowers these small businesses to expand operations by taking on bigger projects by bridging gaps in cash flow through an invoice and finance creditor facility of up to R1 million.

“We reached a personal record when our quickest time to funding for a customer was 2.5 hours from application to receipt of funds,” says Daniel Goldberg, founder of Bridgement. “To put this into context, the average time among major banks in the country is approximately five weeks.”

From a partnership perspective, Bridgement is excited about the potential to make funding accessible to a broader base of SMEs.

“Many SMEs do not apply for funding because they either do not understand the process or are disheartened by getting turned down numerous times,” says Goldberg. “This partnership sees us delivering improved innovation to make things simpler in small business finance.”

Since 2011, Retail Capital, has advanced almost R2 billion to SMEs and has helped over 6 000 SME businesses in the last year with funding for expansion. This in turn leads to business growth and more employment.

“Banks have made gaining access to funding a very tedious process where we offer SMEs with speedy, convenient access to funding,” says Miguel Da Silva, MD of Retail Capital Group’s Funding division. “We estimate that the additional funding provided by us over the past eight years has resulted in more than 12 500 jobs being created.”

According to Da Silva, the Xero partnership is designed to offer a faster funding solution.

“Already, access to the Xero API has enabled Retail Capital to view customer information easily, resulting in real-time decision-making on the approval process. It alleviates much of the time pressure when it comes to determining the eligibility of a small business for funding.”

The third partner, Lulalend, was launched in 2013 to help grow small business in the country. Like Retail Capital and Bridgement, Lulalend is a digital business working with access to customer data instead of meeting them face-to-face.

“SMEs are significantly underfunded and banks are not proactive in helping them grow,” says Trevor Gosling, founder of Lulalend. “We wanted to launch a technology company that could provide SMEs with assistance at scale.”

It provides lending to a variety of clients ranging from those with R100 million turnover to sole traders.

Integrating with Xero enables Lulalend to gain immediate access to company records, resulting in a more efficient credit risk assessment. This greatly improves the speed of funding decisions, providing small businesses with the capital they need to grow.

BUSINESS REPORT ONLINE

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Flux Panda Brings Live Stream Shopping to MENA Region

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Flux Panda Founder, Alexander Rauser

In response to the restrictions caused by the pandemic, Flux Panda was created to encourage businesses in the Middle East and North African region to utilize live streaming platforms to sell their products. The App combines the functionalities of an eCommerce website and live streaming app. Merchants upload the products they want to sell during the live stream, connect Flux Panda to multiple social media platforms with live streaming like Facebook Live or Instagram Live, and their customers can buy the products by clicking the buy button and entering their payment details.

“Our goal is to make the selling and buying process on live streams much easier and enable any business to own the experience. While many small and large businesses are already selling live on social networks, our solution fixes some key problems such as order management, real-time inventory, and customization capabilities. You could say we are similar to a platform like Shopify, but focused on live commerce.” says Alexander Rauser, Founder and CEO of Flux Panda.

The App offers a flexible pricing model to cater to small businesses, eCommerce companies, and even large retail brands. Currently, the Flux Panda partner network covers South East Asia, Central America, Africa and the Middle East with further expansion plans in 2021.

According to research by Coresight, live selling generated $60 billion in global sales in 2019 and expectedly doubled in 2020 to $129 billion. Live selling has been popular in Asia for many years, even before the pandemic hit. The largest western fashion brands like Burberry and Louis Vuitton have already tried live stream eCommerce through China’s biggest marketplaces like Tmall and Little Red Book.

About Flux Panda

Flux Panda is a live selling solution established in 2020. It combines the functionalities of a multi-platform live streaming tool and an eCommerce website so viewers can view the details, add to cart, and pay for the items being demonstrated. It is the only solution where merchants can sign up and go live without any assistance or setup fees. It can be used by merchants with or without their own eCommerce site.

 

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aYo Uganda delivers value through pandemic

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Microinsurer aYo Uganda has underlined its commitment to the economic wellbeing of its customers in the country by paying out more than UGX 760 Million Shillings in 2020, through the height of the Covid-19 pandemic. The company offers Hospitalisation and Life Insurance Cover through its two insurance products, ‘Send with Care’ and ‘Recharge with Care’. Commenting on the company’s performance, the CEO of aYo Uganda, Allan Lwanga, said consumer anxieties around Covid and its related economic challenges had heightened awareness of the need for protection and help in the event of either loss of life or hospitalisation.

“Despite the challenges brought about by the containment measures and an uncertain pathway of the pandemic including over three months of lockdown, the company was able to onboard up to 1 million new customers for the Recharge with Care product, and over 200 000 new customers for Send with Care products,” said Mr Lwanga.

Microinsurance is seen as a powerful enabler of financial inclusion in African markets, providing a much-needed social safety net that helps vulnerable people and particularly people with low incomes to stay afloat when the unexpected happens. This is particularly important in a developing country such as Uganda, where lower income households and informal traders have been hard-hit by the pandemic, as it has reduced their ability to generate an income.

aYo Uganda’s ‘Send with Care’ and ‘Recharge with Care’ products cater for all MTN subscribers. aYo Recharge with Care offers life and hospital insurance cover every time customers recharge their MTN airtime. Subscribers can sign up by dialling *296# on their mobile phones, and use the same process for filing claims. Valid claims are paid directly to the claimant’s mobile money wallet without any hassle. With Send with Care, aYo provides up to triple the amounts that customers have sent via MTN Mobile Money over the previous four months. Life cover pays out to their family in the event of their passing, and hospital cover pays straight into their MTN Mobile Money account if they spend one night or more in hospital due to an accident or illness. When customers send money, they simply select aYo Send with Care when prompted*, or dial *165*1*4#.

 

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CEO Corner

African Bank Appoints Kennedy Bungane, CEO

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African Bank New CEO, Kennedy Bungane (Press Release & Image: African Bank)

African Bank (“Board”) announces the appointment of Mr. Kennedy Bungane as the Chief Executive Officer (“CEO”) and as an executive director of the Bank and its holding company, African Bank Holdings Limited (“ABH”) effective 14 April 2021. The Bank confirms that the appointment of Kennedy was done in accordance with African Bank’s policy on the selection and nomination of executive directors, and in order to fill a vacancy as well as add to the skillset on the Board.

Kennedy brings over 20 years of banking experience with him, having started his career at Standard Bank in 1991, holding a number of senior positions, including Head of Global Markets Sales, Head of Institutional and Corporate Banking, CEO Corporate and Investment Banking for Standard Bank South Africa, and a member of the Standard Bank Group Executive Committee. After joining Barclays Africa in 2012 as Chief Executive of Barclays Africa Limited and Head of Absa Group strategy, Kennedy led the sale of Barclays Africa Limited to the ABSA Group. More recently, Kennedy headed up the Phembani Group as its CEO. He also brings investment and strategic experience gained as the founder and chairman of Nokeng Telecoms and chairman of Idwala Capital.

Kennedy holds a Bachelor of Commerce degree, a Master of Business Administration, and completed the advanced management program at the Harvard Business School (USA).

Commenting on Kennedy’s appointment, the Chairman of the Board, Thabo Dloti, stated, “We welcome the appointment of Kennedy as the new permanent CEO. Kennedy has a keen sense for managing complex stakeholder issues. He has a proven track record in identifying and nurturing leadership, which promotes strong teams to deliver successful results. His passion for the role that banking can play in transforming society resonated strongly with the Board.

As an experienced banker, he also critically has a good grasp of the strategic challenges facing the Bank, within a muted South African economy and competitive landscape, as well as the required regulatory and governance framework.

 

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