The #feesmustfall campaign has brought about some robust discussions around the future of the youth in South Africa. The focus on youth un(der) employment is one of the topics that has been pushed to the forefront. With the current unemployment rate of 26.6%, there needs to be more emphasis on self-empowerment to allow us as a country to move forward economically. The traditional approach to job hunting should be attuned to the future where technology can be embraced and tactical thinking is used to drive the economy. This involves entrepreneurial endeavours, looking for opportunities in young companies and upskilling manual labourers.
Given the fragile state of the economy, the private sector, which represents a considerable contributor to gross domestic product (GDP) is placed under pressure and as a result many companies have cut costs through retrenchments.
As the economy contracts, start-up companies have shown resilience and may be the solution to the country’s joblessness woes. The growth of financial technology (Fintech) companies in South Africa in particular is on the rise.
Fintech companies are companies that find inefficiencies in the market and using innovative thinking and technology to provide solutions and products to combat those inefficiencies in order to add value to consumers. The balance between technology and human workforce is a fine one, but how can the solution to eradicating or improving unemployment be innovation and technology when innovation and technology are replacing human resources?
“The riskiest thing we can do is just maintain the status quo” – Bob Iger (Chairman and CEO, Walt Disney Company).
Small and medium enterprises (SME’s) play a key role in driving the economy and aiding job creation, however, some of the systems that are in place are not necessarily geared for small business but aimed rather at traditional institutions. This imposes restrictions on the ability for SME’s to prosper. Measures have been implemented by government such as government grants and tax concessions to assist the growth of SME’s. Although progress has been made to stimulate SME’s, gaps and inefficiencies still exist.
Fintech companies which thrive in the banking and financial services space are disrupting the playing field by providing services and products that are more accessible and bespoke to the consumer.
Fintech companies are able to provide funding solutions, mobile money transactions, mobile billing systems and trading platforms (to name a few) to SME’s in order for them to grow their business. Since funding remains a stumbling block for many SME’s, Fintech companies are allowing these SME’s access to funding that banks are often not willing to provide. Thus, Fintech companies have a vital role to play in the success of SME’s.
I recently attended the Finance Indaba held on the 13th and 14th of October which also hosted the African Fintech awards ceremony. Easy Equities/SatrixNow won the best African Fintech company for 2016. This company has changed the landscape of investments by making it accessible and affordable to all individuals. SatrixNow allows individuals to easily purchase exchange-traded funds (ETF) as well as vouchers via the app. Easy Equities was able to identify the need for affordable investments and as such patented fractional ownership of shares. Individuals who were previously unable to afford to invest in shares can now pool their funds with other individuals to purchase shares.
Some other examples of Fintech companies are as follows:
Lulalend provides funding in a transparent and understandable manner. Funding is applied for online and the outcome of the application will be provided within minutes. Funding amounts are between R20 000 and R250 000 and payable within 6 months.
Thundafund works on the crowdfunding model through which people with great ideas can access capital, establish an initial market for their products/services and receive business/mentorship support. Thundafund aims at channelling R271 million to 5200 enterprises/projects and creating 15000 jobs in the next four years.
Payments and transfers
Peach Payments provides payment solutions to online and mobile businesses enabling them to easily accept payments from consumers across the globe and especially from those in the emerging markets. Payments can be accepted through websites, mobile sites and mobile applications.
Pocketslip has developed the world’s first fully integrated digital receipt technology App that provides secure and live cloud based storage of receipts and integrates with all POS systems. It is ‘cost savings’, ‘CRM’ and ‘Green’ rolled into one and it’s free to the user. A customer shops at a Pocketslip enabled retailer and automatically receives their receipt on their email, app and online to use later on for warrantees, returns, tax and accounting. Retailers love the solution as they have access to their customers and can send them relevant offers based on historic purchases. This is facilitated through the Pocketslip NEWTON machine learning engine. Pocketslip currently processes in excess of 1000 receipts per day.
Potential gaps that can be filled in the South African market
The potential for growth in the Fintech environment seems endless and gaps still exist in South Africa and Africa for future Fintech companies to take advantage of. An example of this is a UK established company, Fingenious, which is a global supplier of artificial intelligence to the finance industry. Fingenious has changed the banking environment by providing tailor made solutions to customer questions instantaneously without employing help desks or call centres. Through technology and innovation, Fingenious has created help desk automation.
Fintech companies are the way forward, for both SME’s and consumers alike. We have a long way to go as a country in overcoming unemployment but the possibilities do exist and need to be taken advantage of. Our stringent labour laws can be relied on to protect those that need protection but should also allow for flexibility in dealing with technological advancements that are inevitable and which will alter the traditional labour environment. The real question is how to balance the efficiencies that technology brings about with the dire need for more employment opportunities.
Natasha Bhowani Seeth CA (SA)