Enhancing financial inclusion 
in Sub-Saharan Africa through data driven lending.

In the media

financial-inclusion-in-south-africa
Financial Inclusion in South Africa

South Africa’s financial sector is described as large and sophisticated, consisting of banking and non-banking financial institutions, as it contributed 22.39% of GDP in 2018 and had total assets of R5.14-trillion. The sector, however, remains highly concentrated with the five largest banks holding the largest total assets, whilst NBFIs comprise about two-thirds of financial assets, which is large for emerging markets. The landscape is changing rapidly though, as banks face increasing competition from technology-based financial services, newly established banks, and growing credit granting from other credit providers. This has forced the major banks to place increasing emphasis on growing customer numbers with innovative product offerings to attract lower-income earners. Competition from newly established banks – i.e., Discovery Bank, Bank Zero, and TymeDigital – aims to disrupt the sector and it is forcing big banks to intensify their efforts to modernise technology platforms to satisfy customers’ demand. Financial inclusion has seen considerable improvement over the years, with around 89% of adult South Africans using some form of formal financial service or product in 2017, versus the 64% adults in 2007. Access indicators reflect the depth of reach and variety of financial services and the cost of financial services and products to the users. Thus, improving access requires continual removal where possible the potential barriers to bringing services to the low-income market. The purchasing of banking products and services in South Africa is predominately done through traditional bank branches, most transactions are executed through direct electronic transfers, ATMs, POS, cell phones, and online services. To further extend financial inclusion, however, greater use of other distribution models is required to provide support for the low-income segment. A Financial Inclusion Policy paper by South Africa’s National Treasury has highlighted that affordability of financial services, especially the ongoing costs of using such services, is amongst the key indicators of financial service accessibility. A World Bank diagnostic into the market conduct of South Africa’s retail banks found that accounts became quite expensive for low-income earners the more they used the physical rather than digital infrastructure, as institutions try to promote increased usage of digital transaction streams. The South African banking services infrastructure has a well-developed services network and makes extensive use of technology to enable and extend the service reach. According to the Banking Association of South Africa, since 2010 more than 90% of households had access to physical points of presence within a 10km radius. The focus on access in the financial sector has led to both an increase in the number of points of service as well as in the geographic distribution of services, with each of the 278 municipalities in South Africa having some transactional points of service from a regulated service provider. The increase in the transactional capabilities of POS payment devices in stores, enabled by both banks and retailers, is particularly relevant for low-income earners as these devices enable consumers to make payments for goods and some third-party services as well as cash withdrawals. Although the use of technology and physical access has improved financial access in South Africa, there is still much scope for improvement as indicated by the lack of financial education – a key factor in ensuring sustainable and effective financial inclusion. Increased financial literacy levels are necessary to improve the usage of existing users and of extending financial inclusion to currently un- or under-served people.

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Future of Payments in South Africa

A new payment model is disrupting the traditional credit market globally and in South Africa. Buy now, pay later (BNPL) is a consumer orientated model which ultimately helps consumers make better spending decisions. However, it also has massive benefits for businesses by reviving suffering industries as consumers feel more comfortable paying for products and services they would otherwise not feel comfortable paying. Traditional credit-card payments is a system that desperately needs innovation as more and more consumers are opting out of interest heavy purchases. This is pushing local businesses to find solutions to attract and retain customers. Which is why businesses in South Africa are opting into the BNPL payment model. It is a model that attracts consumers who would otherwise not buy a product or service, by providing them with a more cost-effective solution to pay off their purchase, interest-free over 3 months. BNPL is a growing payment trend amongst shoppers in South Africa. Largely due to the pandemic, there is a strong aversion to debt that is developing within South Africa. The challenging economic climate has increased consumer caution around taking on new debt, especially when it comes to retail. This is forcing South Africans to seek solutions to getting what they need now and only paying for it later, without incurring high interest fees associated with credit cards and loans. As the pandemic continues to reshape customers’ payments expectations, BNPL is expected to play a vital role, offering a flexible alternative to cash-strapped consumers together with the freedom to choose how they want to pay at checkout. Finclusion, a company with proven execution in financial services and technology, is launching the newest BNPL offering, Click2Pay. Click2Pay will allow consumers to purchase the products they want and repay interest free instalments over 3 months. All the consumer has to do is select the BNPL payment option from Click2Pay and complete a straightforward, paperless, application. They receive an instant decision. The decision is made using their credit vetting policy and credit scoring AI. C2P is setting out to change the way people shop and there are a number of factors that sets them apart within the South African BNPL market. Firstly, a paperless application process which saves you precious time since you don’t have to waste it on looking for documents. They also have African experience which helps them understand the South African market in which it operates. Additionally, C2P has market leading credit decision making that makes use of innovative AI algorithms it has developed. Most importantly it is a simple and private application process, which asks permission before accessing your information and does not share that information with anyone else. With more than 30million online transactions in 2019 and 2020, the time is rife for payment options that cater to a world altered by the pandemic. The only way for businesses to survive is to adapt along with its customers. Click2Pay is on the cutting edge of these developments and making the world of BNPL much more exciting. Follow Click2Pay on social media to stay up to date on all new developments. Instagram: @click.2.pay Facebook: Facebook.com/Click2PayZA LinkedIn: linkedin.com/company/click2payza

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How technology is transforming financial services
How technology is transforming financial services

Technology has changed the way the businesses not only operate but also how they service their clients. The financial services sector has been one of the most innovative and forward thinking in adopting technology and technology-enabled solutions to reach their customers in new and imaginative ways. To that end, we look at the ways in which this sector has been transformed by technology. A PWC report, [Financial Services Technology 2020 and Beyond: Embracing Disruption](https://www.pwc.com/gx/en/industries/financial-services/publications/financial-services-technology-2020-and-beyond-embracing-disruption.html), has highlighted that the industry will change over the next 5 years, considering that the barriers to entry have decreased and disruptive Fintech companies are now able to attack specific elements of the financial service value chain with technology driven solutions. Additionally, the emergence of open banking and API-enabled data sharing has presented various ways for financial institutions to enable a more customer-centric approach. Banks, insurance companies, lending platforms and other financial institutions are now learning to exploit these vast sets of data to transform into data-driven enterprises, as they are now enabled by technologies like Big Data, Artificial Intelligence and Machine Learning. The demand for digital solutions has increased tremendously over the years but more so since the COVID-19 pandemic which quickly gave rise to the development and adoption of mobile wallets and peer-to-peer payment platforms allowing users to make payments from anywhere; biometric authentication allowing improved security, and Ai and voice technology improving convenience and speed. With more and more customers moving towards a cashless experience the competition and need for innovative solutions increases, which will force financial services providers to generate alternative methods to gain and maintain maket share.

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Finclusion Group rebrands its subsidiary in Kenya to become TrustGro
Finclusion Group rebrands its subsidiary in Kenya to become TrustGro

Finclusion Group is happy to announce that after the successful rebranding of its South African lending businesses, it has now completed the rebranding from GetBucks Kenya to TrustGro. Finclusion Group anticipates to finalize the rebranding in eSwatini during 2021 – which will conclude the successful turnaround of the distressed assets acquired from the MyBucks Group in 2019. TrustGro’s mission is to help enhance the quality of life of its customers through simple, convenient, and appropriate financial services. Today – TrustGro holds a strong footprint in Kenya with more than 7000 clients contributing to its book holding over USD7million in customer loans. TrustGro aims to grow its customer base by building robust, integrated, enabling technology to deliver personalised and easily accessible financial services. TrustGro will continue to utilize credit scoring services and risk management services from Finclusion Group’s associate Fractal Labs to deliver maximum value to its customers. Kenya has a population of around 54 million people. 41% of the population have an active bank account, however, with the advent of mobile money, 83% have access to financial servoces. The possibility of reaching new customers through technology is evident. “Mobile subscriptions in Kenya is currently at 109%, one of the highest in Africa, proving digital and mobile banking is the obvious path to reach the underbanked in emerging African markets,” says Tonderai Mutevsa, CEO of TrustGro. Tonderai Mutesva is a seasoned banker, who took control of GetBucks Kenya together with Finclusion Group in 2019. TrustGro’s vision is to create an ecosystem where people and organizations can access financial solutions that help them meet their desired objectives. “Our customers should easily find us at their point of need. It should not be difficult to access any of our products or services or those of our partners. We endeavour to make all our customers feel that our solutions are designed for them as an individual. We do not want customers to fit into a set of pre-defined products and services, but to develop solutions that are customized to yield the best possible value for them.” Timothy Nuy, Founder & CEO of Finclusion Group, comments “This is an important milestone for our Kenyan operation, leaving the legacy items behind and creating a foundation for an exciting future. We believe we will be able to announce a number of exciting partnerships and growth avenues, to further accelerate our Eastern-African growth in the near term.” Matsi Modise, Chairwoman of Finclusion Group, adds “We can only congratulate Tonderai on the turnaround achieved in the Kenyan operation since relocating to Kenya early 2020. We wish TrustGro, its staff and its customers all the best for the future.” For more information on the rebrand please visit the TrustGro website: www.trustgro.com __About Finclusion:__ Finclusion Group is enhancing financial inclusion in Africa by building transformative financial technology services focused on high-growth market segments, providing world-class customer experiences. Our businesses leverage our credit, risk and technology expertise to grant financial services safely and easily using advanced, proprietary AI algorithms. Our current key focus areas are financial wellness, credit scoring and direct lending, operating through the brands Fractal Labs, smartadvance, niftycredit, niftycover, TrustGro and Click2Pay in South Africa, Eswatini, Kenya, Namibia and Tanzania. More info on www.finclusiongroup.com.

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Finclusion brings in Matsi Modise as Chairwoman to drive African growth
Finclusion brings in Matsi Modise as Chairwoman to drive African growth

13 May 2021 – Recent findings have shown that increased investment into innovative technology has accelerated the development of advanced digital platforms creating alternative ways for service providers to reach new and existing customers. Financial services providers are using technology to transform banking, lending, and insurance across Africa, and this has presented opportunities for financial technology companies to create new channels to service those clients in underserved markets. Finclusion Group aims to be at the forefront of fintech in Africa by leveraging its credit, risk and technology expertise and knowledge to drive financial inclusion and well-being in Africa. The financial technology group uses advanced proprietary AI algorithms developed in-house, coupled with pioneering technology to grant financial services safely and easily, whilst simultaneously facilitating fraud prevention, maintaining accurate automated credit decisions, and streamlining overall business operations. The group is currently working with leading African brands in FMCG, medical services, and retail amongst others to enable and empower businesses, their clients, and their employees. The group has recently announced the appointment of Matsi Modise, as Chairwoman to accelerate the implementation of the group’s vision. Not a stranger to the tech start-up and entrepreneurial space, Matsi is on a mission to contribute to Africa’s skills revolution and boost South African entrepreneurs. She is the Founder & CEO of Furaha Afrika Holdings, Vice-Chairperson of SiMODiSA, Chairperson of Kuehne + Nagel, and sits on the board of The Innovation Hub. Matsi brings to the Finclusion Group, formidable experience and a passion for entrepreneurship, innovation, technology, and an inclusive African market. Matsi previously was featured as a leader amongst her generation at the 2016 World Economic Forum Annual Davos meeting as a top 50 global shaper (https://www.youtube.com/watch?v=vyQODY1y0J0). “Financial and digital inclusion is the cornerstone of Africa’s next generation of growth. I joined Finclusion Group because Africans need to create and tell their story of success. I am passionate about digital platforms that not only are innovative but have seen an opportunity to empower Africans to be more included in the economy, to learn better financial management, and to be able to better themselves, ultimately. With our phenomenal team, I hope to see the Group grow and push the boundaries in creating access to financial services and financial responsibility and decision-making to everyday people.” said the businesswoman. Banking penetration and financial inclusion in Africa though, remain well behind the rest of the world – with credit card access in South Africa (most mature market) at only 8.9%. Smartphone penetration in Africa is growing at a rapid rate with around 1 in 5 young Africans using their mobile devices to purchase products and services. The African market, which has the youngest and fastest-growing population in the world and is expected to reach 2.5bn by 2050, is ripe for technological disruption offering Finclusion a chance to leapfrog and benefit from a multi-level multiplier effect. Finclusion currently operates in through its innovative sub-brands with the capability to deploy across multiple Africa countries. - Fractal Labs: A B2B platform that using business data and AI algorithms provide customized credit scoring solutions to reduce risk, optimise business operations, and service clients that have previously been financially excluded. - Nifty: Provides easily accessible personal credit and insurance products direct to the consumer using smart technology that focuses on accessibility and ease of use. - Click2Pay: Enabling small businesses and retailers to provide their customers with a buy-now-pay-later model that will increase purchase power, basket size and drive business growth within the SME industry. - SmartAdvance: Through corporate partnerships, SmartAdvance provides employers a strong financial partner to deliver employees with accessible and relevant financial services including financial education, financial wellness products, wage-streaming, and installment loans. As Group CEO, Timothy Nuy, stated “Innovations in Financial technology have forced financial services institutions to re-evaluate how they do business and pivot their traditional financial services models to adapt to the evolving industry. Fintech will continue to transform the delivery and adoption of financial services with a focus on ease of use and accessibility. Businesses not adapting will fall behind.” Finclusion is excited to showcase more of the portfolio, the strides the company has made, and the gaps identified in the African market. The company has made partnerships that have allowed for the Group to service over 670 000 clients across Sub-Saharan Africa and to have granted more than $1bn in loans with a consistent 7.1% default rate. The African vision comes to life through the group’s analysis of what each market needs and the leadership team, where the organization is honoured to have exceptional Pan-African talent that has been working hard to drive the mission of financial inclusivity and education, and wellness.

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Finclusion lending brand GetBucks Eswatini partners with local cellular brands to enable device financing in eSwatini
Finclusion lending brand GetBucks Eswatini partners with local cellular brands to enable device financing in eSwatini

The 5th of February saw the official launch of the partnership between MTN Eswatini, MaraPhones and GetBucks Eswatini, a financial services business within the Finclusion group. The strategic partnership between the three brands will enable MTN customers to purchase MaraPhones smart devices on credit, allowing them to pay an affordable monthly installment over a few months. GetBucks Eswatini is a registered credit provider that will provide the credit offering to MTN customers to purchase the smart devices in periods between 3 and 12 months depending on client’s affordability and basket size. Finclusion, through its portfolio of companies aims to enhance financial inclusion in Sub-Saharan Africa through technology and lending with focus on ease of access, thus making the strategic partnership between the three brands a perfect fit. “We have already seen a good response since the launch of our #DoTheMost campaign. The greatest success is that we are now servicing customers that have been previously excluded due to affordability challenges. Giving our customers the option to pay for their device with flexible payment options has opened a new opportunity for MTN Eswatini and our customers.” says Chief Marketing Officer Mncedzi Ngomane With the new Covid19 world which everyone has had to adjust to very quickly, there has already been talk around financing Wi-Fi- routers, an essential in the new way of working. “The GetBucks Eswatini team is very excited about partnering with these big African Brands to increase smartphone penetration in the Kingdom of Eswatini. We have always been offering traditional personal loans, so this is a new avenue for us which will certainly pave the way for new partnerships in future. Eswatini is ready to embrace technology and we are honoured to be part of this enablement.” Says Zandile Ntombi Dlamini, CEO of GetBucks Eswatini

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Finclusion South Africa empowers learners of Kasselsvlei Comprehensive High School

__It was an emotional day for both the teachers and learners of Kasselsvlei Comprehensive High School as we gathered in the school offices in anticipation.__ With Covid19 hitting South Africa in March this year and most of the country coming to a stand still, many learners across the country have suffered with schools closing, no transport, and social distancing which has prohibited students all attending class at the same time. Whilst some school learners have been able to learn remotely, others may not have the technology to do so as easily, some having to study for their upcoming Grade 12 exams via WhatsApp. After reading a column in the Sunday Times by Professor Jonathon Jansen that included an essay by Etaine Wilson, a senior learner at the school sharing her dreams as a woman in South Africa and not only what she hopes to achieve in her future, but how she hopes to change the futures of women and children in our beautiful country we as Finclusion South Africa were inspired and looked to see where we could assist. Our mission is to enhance financial inclusion and enable small communities in Africa through the delivery of technology that will see individuals, families, small businesses and communities develop and grow towards a better future. “This article really resonated at a deeply personal level. We have to show our youth that people are listening, that your efforts are noticed and recognised, now in the time of Covid more than ever before. It is schools like Kasselsvlei and people like Etaine that can and will change lives and communities in South Africa. By helping a few people, we are helping so many in the long run” Says Mark Young, CEO of Finclusion South Africa On Wednesday the 22nd of July, Mark Young met with the learners and teachers at Kasselsvlei High School to hand over some much needed learning materials for the matric learners including calculators for each student, pencil bags with writing tools as well as laptops with internet bundles for three of the top students that have struggled with distance learning through the lockdown period. “Education is the key to the development of people, small communities and nations, and without it, these will never prosper. We see this a first step in a longer journey we hope to walk with Kasselsvlei Comprehensive. We hope these students can continue the school year and achieve the results they set out to achieve despite the setbacks we have encountered this year”, Concludes Young

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smartadvance and Van Schaik announce strategic partnership

smartadvance South Africa and Van Schaik Bookstore are pleased to announce they have entered into a strategic partnership that will drive meaningful and effective financial and educational access to thousands of students and studying professionals across South Africa. Smartadvance is an NCR registered credit provider that helps customers manage their money better using personal data, and aims to empower customers through financial wellness and education, as well as assist clients through financial services and debt rehabilitation. With the importance of education and a vision of enablement playing an increasingly critical role in Smartadvance’s product expansion, it was a natural fit to partner with Van Schaik, which uses a digital and physical platform to deliver studying materials from stationary to laptops and aligns to the same vision of enabling and assisting ordinary South Africans with meaningful and responsible education. “The partnership with Van Schaik allows Smartadvance to continue to deliver on its promise of ensuring that our customers borrow responsibly and for the right reasons, by providing products that are designed to meet their needs and help them grow.” says Mark Young, Smartadvance SA CEO. “By partnering with Van Schaik we have created a fantastic customer focused solution which we are proud to be able to offer to learners across South Africa, allowing them access to tools that may have financially restricted them before, Concludes Young. Established over 100 years ago, Van Schaik was started with the aim of servicing institutions, professionals and students by deploying the most appropriate sales channel for Academic materials in order for them to achieve their educational goals. With over 70 physical branches nationwide and an online store, learners and professionals have access to quality educational materials from anywhere. “By leveraging on each other’s strengths and resources, Smartadvance and Van Schaik look forward to delivering relevant, affordable and accessible educational materials to students and professionals across South Africa, says Stephan Erasmus, Van Schaik Managing Director. “The partnership with Smartadvance is a major milestone in our mission to service our clients in Africa with quality education material in order for them to achieve their educational goals, which in turn uplifts the greater community's standard of living. We aim to leverage the GetBucks relations with employer groups to offer an affordable and practical education benefit to ensure every employee and their families, irrespective of their salary scale, get a fair chance to the education they deserve. Concludes Erasmus

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Debt Relief Bill

The recently passed Debt Relief Bill that enables the suspension of debt, with the potential for it to be written off, could result in major losses for credit providers and the end of credit lines for many low income earners. The Treasury estimates that the passing of the debt-relief bill could result in a write-off of between R13.2bn and R20bn of consumer debt. Once implemented, the National Credit Amendment Act will allow people who earn less than R7 500 a month and have R50 000 in total unsecured debt - excluding car finance and home loans - and who are over-indebted to apply to the National Credit Regulator (NCR) for debt relief. The NCR will then assess each individual submission. Should the NCR determine the consumer is unable to repay what they owe without its intervention, The NCR will suspend some or all of the repayments for a year. At the end of this period, the NCR will reassess the consumers position and should the consumer be able to repay their debts in five years, they may re-negotiate the period of the debt and interest rates. If the consumer is still unable to repay, they may suspend repayments for another year. At the end of this period, if the consumer is still unable to settle their debts, all or part of it could be written off entirely. “Realistically, if the government estimations of R 13.2bn are written off, the NCR would have to potentially review at least 264 000 agreements, assuming that all are approved. This equates to 22 000 per month and on an average basis implies the Regulator would review 1 000 applications per day. Conservatively assuming that each review takes 45 minutes, this implies a staff complement of close to 120 is required just to assess the case, excluding any review or sign-off process”.,ays Mark Young, CEO of Smartadvance South Africa Whilst the objective of the National Credit Act was to expand access to credit to a broader segment of consumers in South Africa, the last four years has seen a range of amendments and supplemental regulation that has constrained access to the market that we as credit providers were intended to service. With lending criteria tightening under the law, millions of low-income credit users will no longer be able to get credit in future, for some the very lifeline they depend on monthly. Besides the risk of many credit users being excluded, the new legislation will also increase the cost of credit, possibly create more opportunity for illegal lenders and loan sharks, as well result in a more turbulent credit market in South Africa. With the opportunity of having debt dissolved, this could result in low income earners incurring more debt without any intention of repaying their loans. “For credit providers such as Smartadvance that play a key role in the provision of credit for those unexpected life events and already have conservative credit assessment and affordability criteria in place, the risk is that we will no longer be able to play a role for the broad market that we service.” says Young, “Despite this we remain committed to our customers and the broader market and will continue to create innovative products and channels to support the evolving market and consumer needs” concludes Young

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Finclusion Pte Ltd

151 Chin Swee Road, #07-12
Manhattan House,
Singapore, 169876
Number: 201824790K