South Africa’s Standard Bank plans to reach out to millions of small shop owners and other informal retailers across the continent through taking up a stake in local fintech firm Nomanini so that it is able to offer credit to the targeted market.
An investment of $4 million in Nomanini has been made by Africa’s biggest bank by assets. Nomanini is an e-wallet that serves as a bridge between the informal merchants and the distributors and the company now plans to launch the service throughout 14 countries in Africa by the start of 2021.
According to a 2017 report by audit firm Deloitte, 90 per cent of all transactions that happen in Africa are done through cash or through informal channels such as kiosks and open-air markets.
Data on the retailers would be gathered and analyzed by Standard Bank with the use of Nomanini’s technology.
It would be possible to proxy the risk associated to a shop, develop a financial profile and understand its ordering patterns based on data on just one primary product line, such as pre-paid airtime, said Adrian Vermooten, Standard Bank’s head of digital in Africa regions. This analysis would enable the bank to very easily predict the re-stocking needs of a trader and thereby alerts such as an offering to arrange and underwrite its next order.
This can be achieved through the use of devices supplied to the traders of Nomanini or Standard Bank or through the leveraging of any other form of network that currently exists in the market or through devices from third parties.
Currently, the role of mobile money agents in African countries is undertaken by tens of thousands of informal traders, Vermooten pointed out. “Those are all small little businesses that we find really attractive,” he said.
Standard Bank also plans to make use of those retailers for making offers of other financial service to their customers such as cash deposits and withdrawals later on.
Anywhere between 50 million and 150 million people can be reached by even just 100,000 retailers, said Vahid Monadjem, founder and CEO of Nomanini.
Currently in the African region, mobile operators tend to dominate the area of financial services in markets like Kenya and the licences of Standard Bank to lend and offer other products, such as insurance would give it an edge over the mobile operators.
Those Kenyans who do not have a bank account are still able to transfer money cash via mobile phones with the M-Pesa mobile payment service platform of the Kenyan telecom company Safaricom.
Traditional competitors such as FirstRand, which has also entered into a partnership with a fintech company to reach out to informal businesses, would laso give competition to Standard Bank.
There are also new players in the segment. Plan for offering business accounts is being finalized by the digital-only lender TymeBank that set its foot in the region earlier this year. And informal retailers are being specifically targeted by a bank that has been jointly created by money transfer firm Hello Paisa and lending company Sasfin.
(Adapted from CryptoNewsz.com)