JOHANNESBURG, Aug 27 (Reuters) - South Africa's Standard
Bank SBKJ.J has taken a stake in local fintech firm Nomanini
to offer credit to potentially millions of small shop owners and
other informal retailers across Africa that have limited access
to banking services.
Africa's biggest bank by assets has invested $4 million in
Nomanini, which connects informal merchants with distributors
via an e-wallet, and aims to roll the service out across 14
African countries by early 2021.
Nine out of 10 retail transactions in Africa are conducted
in cash or via informal channels like kiosks and open-air
markets, according to a 2017 report by audit firm Deloitte.
Using Nomanini technology, Standard Bank will collect and
analyse data on the retailers. Adrian Vermooten, Standard Bank's
head of digital in Africa regions, said data on just one primary
product line, such as pre-paid airtime, was enough to proxy the
risk associated to that shop, build up a financial profile and
understand its ordering patterns.
This will allow the bank to pre-empt the trader's
re-stocking needs and send them alerts offering to arrange and
underwrite its next order, for instance.
This could be done via Nomanini or Standard Bank devices
supplied to the traders or by leveraging other existing networks
or devices from third parties - whatever fits best in each
market.
Vermooten pointed to tens of thousands of informal traders
who currently act as mobile money agents in African countries.
"Those are all small little businesses that we find really
attractive," he said.
At a later stage, the bank will look to help those retailers
offer financial services, like cash deposits and withdrawals, to
their customers.
Vahid Monadjem, founder and CEO of Nomanini, said even just
100,000 retailers could reach between 50 million and 150 million
people.
Standard Bank hopes that its licences to lend and offer
other products, such as insurance, will give it the edge over
mobile operators that currently dominate financial services in
markets like Kenya.
Kenyan telecom company Safaricom SCOM.NR has pioneered
offering Kenyans without bank accounts a network to transfer
cash via mobile phones with its M-Pesa mobile payment service
platform.
Standard Bank will also face competition from traditional
rivals such as FirstRand FSRJ.J , which has also teamed up with
a fintech firm to target informal businesses. New players are entering the fray too. Digital-only lender
TymeBank, which launched this year, is planning to offer
business accounts, while a bank set up by money transfer service
Hello Paisa and lender Sasfin is specifically targeting informal
retailers.
Hello Paisa's Managing Director Ahmed Cassim told Reuters in
an interview on Monday that the bank, launched in June, would
offer retailers point-of-sale devices in order to collect data
that would allow it to sell them products like loans and
insurance - a strategy similar to Standard Bank's.
"I think the penny has dropped that the opportunity exists,"
Cassim said, adding that moving a retailer away from cash also
allows its customers to shift towards other methods of payment,
further expanding the addressable market for financial services.
LONG-TERM OPPORTUNITY
Africa is the world's second-fastest growing banking market,
according to a 2017 McKinsey report. Standard Bank and Nomanini will roll out their service in
South Africa, Zambia, Mozambique, Malawi, Angola, Zimbabwe,
Namibia, Ghana, Nigeria, Kenya, Tanzania, eSwatini and Lesotho.
Other products it will offer the retailers include
short-term savings and insurance.
Nomanini is open to partnerships with other banks elsewhere,
but says its partnership with Standard Bank alone will give it
substantial geographical reach and product range.
"The scale of the opportunity for Nomanini within Standard
Bank's footprint can keep us busy for a very, very, very long
time," Manadjem said.