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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.

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Press Release

AfCFTA Extends Reach To North Africa

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The African Continental Free Trade Area (AfCFTA) Secretariat and N Gage Consulting signed a Memorandum of Understanding (MoU) to enhance implementation of the AfCFTA within Africa, with a focus on North Africa and Arabic speaking countries as well as harness the potential of the AfCFTA through targeted outreach towards positive impact in Africa. The MoU was sealed by the AfCFTA Secretary General, H.E. Mr. Wamkele Mene and Mr. Karim Refaat, Chairman of N Gage Consulting and Dr. Sherif Fahmy, CEO.

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The was established as an effort to eliminate trade barriers among African countries with the aim of creating a single market size of 1.3 billion people with a combined annual GDP of $3.4 trillion. As the largest free trade area in the world, the AfCFTA is expected to increase intra-African trade and promote regional economic integration of Africa and, as a result, contribute to the sustainable economic and social development of the continent through the creation of employment opportunities and the reduction of poverty.

Pursuant to the MoU, the two parties commit to strengthen cooperation and promote concrete activities in areas of conducting webinars, tailor effective roundtable sessions, public-private dialogues and to develop a series of monthly newsletters to disseminate relevant information through social media platforms with the aim of raising awareness of business and governments on the AfCFTA, its objectives and showcasing AfCFTA’s Guided Trade Initiative and its role in powering trade among members states. 

Additionally, the collaboration will facilitate the preparation for the AfCFTA Business Forum and The Intra African Trade Fair (IATF) and the execution of different capacity building programs for the member states in order to leverage the AfCFTA to boost intra-African trade and utilise Public Private Partnership (PPP) projects to support investment in infrastructure.

The MoU is expected to promote the AfCFTA as a trade liberalisation instrument and sustainable development enabler and accelerator as well as enhance intra-African trade as an engine for economic diversification and industrialisation.

As one of the leading companies operating in the area of government relations and public policy in the MENA region, N Gage Consulting is committed to support the AfCFTA and will deploy all the necessary resources to strengthen and expand cooperation with the AfCFTA Secretariat to enhance African trade integration. 

In addition to her impressive legal background, Rosemond has cultivated a niche expertise in the tech startup ecosystem. She has consistently provided comprehensive consulting, due diligence, and investor readiness services to numerous companies in the tech sector.

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Press Release

Koa Academy Wins MEST Africa Challenge 2023, Secures $50,000 Funding

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Koa Academy team

MEST Africa, a leading Pan-African tech entrepreneurship training program, seed fund, and incubator, proudly announces Koa Academy as the grand prize winner of the 2023 MEST Africa Challenge (MAC), securing a $50,000 equity investment after a competitive pitch battle among Africa’s brightest tech innovators.

In a thrilling showcase of ingenuity and entrepreneurial spirit, Koa Academy from South Africa stood out at the MEST Africa Challenge finale in Accra, Ghana, surpassing contenders from across the continent. This coveted startup competition, known for identifying and nurturing tech talent, saw Koa Academy clinch the top spot with its groundbreaking solution, poised to transform the Edtech industry.

The competition drew applications from hundreds of early-stage tech startups, rigorously assessed on criteria such as innovation, scalability, and team strength. Finalists from Ghana, Nigeria, Senegal, South Africa and Kenya competed in the grand finale, demonstrating their unique solutions and business models to a panel of esteemed judges, including investors and industry experts.

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Koa Academy, Winner of the 2023 MEST Africa Challenge and a South African innovator in online education, offers dynamic and interactive courses for grades 4-12. With a focus on engagement and accessibility, it champions digital learning, making quality education available to anyone, anywhere, and transforming the educational landscape in South Africa. The startup impressed the judges at the MAC Finale showcasing significant market potential, revenue growth, and social impact.

“Winning the MEST Africa Challenge has been an amazing experience for the Koa Academy team. It highlights the hard work and dedication that everyone has put into growing Koa. This recognition is not just an award; it’s a testament to the passion and perseverance that drives us every day. Amidst the challenges, this journey has brought us closer to others across the continent, forging relationships and connections that fuel our mission even further. We are reminded that we’re not alone in this endeavor and are incredibly grateful for the support and learning opportunities this challenge has presented,” said Lauren Anderson, Co-founder and CEO, Koa Academy, expressing gratitude and optimism for the future of tech startups in Africa.

Ashwin Ravichandran, Portfolio Advisor at MEST Africa congratulated the winner and finalists for their exceptional achievements and resilience. The event also highlighted the support of Absa Bank Ghana for contributing to the challenge’s success. The MEST Africa Challenge continues to be a pivotal platform for emerging tech startups in Africa, offering funding, visibility, and support to innovate and scale. Koa Academy’s victory underscores the vibrant potential within Africa’s tech ecosystem, promising a brighter future for the continent’s digital landscape.

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Deel Acquires PaySpace

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Deel announced today that it is acquiring African-based payroll and HR solution company PaySpace for an undisclosed amount. It is one of Deel’s largest acquisitions to date.

PaySpace has more than 20 years of payroll technology experience, providing payroll engines and HR services in 44 countries across Europe, Latam, Middle East and Africa for more than 14,000 customers. Its size, expertise, and proprietary disruptive payroll technology give it unrivaled scale and reach. Customers include multinationals across various industries such as Heineken, Coca-Cola Beverages and Puma Sports SA.

By acquiring PaySpace, Deel will become the first global payroll & Employer of Record (EOR) with its own full-stack payroll engine localized in 50 countries and integrated into its offering. Deel has the ability to be the system of record for HR organizations worldwide and can give its customers a simple and single interface to manage their global teams. All of this results in greater efficiency and control for companies, faster payroll cycles, more localized compliance insights relevant to their workforce, plus the ability to make changes to their payroll at any time.

The news follows Deel’s acquisition of leading APAC payroll provider PayGroup. Deel now owns the full HR stack- entities, local teams (legal, HR, payroll), and local payroll engines – across six continents. Its four-year ambition is to serve 100 countries with native payroll engines, and this acquisition is a significant step toward that goal.

Deel co-founder and CEO Alex Bouaziz said, “Global payroll is hard to do and critical to get right. As a company, you want assurances you can pay your teams on time, compliantly, anywhere in the world. PaySpace’s single-platform payroll expertise and breadth of coverage, particularly in Africa and the Middle East, combined with PayGroup’s presence in APAC, will give Deel customers the reach they need to grow their businesses globally. Our long-term vision is to be the most comprehensive payroll system in the world.”

PaySpace’s proprietary technology is a cloud native framework built as a single engine. Its platform allows for easy configuration to add additional countries through localization. These localization projects normally take years to complete, but with PaySpace’s innovative technology, it can localize much faster than any other payroll provider.

Clyde van Wyk, PaySpace Director explained, ”Like PaySpace, Deel strives to evolve its offering through disruption. We set out to modernize the payroll industry, which was burdened by manual processes and stringent legislative and compliance requirements, much like Deel revolutionized global hiring. This acquisition brings together leading employment services and payroll technology expertise, delivering a unique and powerful customer offering with unrivaled automation, flexibility and scalability.”

Deel also announced today that it has achieved $500M+ in annual recurring revenue (ARR) organically, outside of this acquisition. In under five years, the company has grown to 3,000 team members in more than 100 countries. It has been EBITDA positive and consistently generating cash for a year and a half.

Since its founding, Deel has transformed into the all-in-one HR and payroll solution for global teams. It owns 150+ entities in the world and now manages in-house in-country payroll teams in over 70 countries, in addition to offering Employer of Record, contractor, immigration, HRIS, and performance management services worldwide.

 

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