In a month when South Africa’s unemployment rate has hit its worst level in a decade (jumping to 29%), there’s a strong trend bubbling, which is tracing the explosive global growth of alternative financing for SMEs. In fact, in the US, they’ve dropped the word ‘alternative’. It has become the norm where banks are no longer the grand central for funding applications.
Analysts predict fintechs will be the solution to closing the staggering financing gap for small businesses across South Africa. Locally we’ve seen the emergence of alternative financing through local fintech’s such as Merchant Capital, which has experienced 150% growth in new customers in 2018 alone and has provided funding to 5000 merchants to the tune of R1-bn over the last six years.
“In our experience, small businesses use the funds for anything that will be additive to the growth of their business: to hire more employees; buy new equipment; refurbish their store; buy more stock – and even for marketing – they don’t necessarily have to be elaborate plans, but each funding step is crucial to the next,” says Dov Girnun, Founder and CEO of Merchant Capital. He says it’s important to recognise that the average venture cycle for SMEs spans across about 10 years through various stages of growth. “The only thing you can truly count on is the constant need for working capital and the bottom line is that SMEs have an appetite for growth that traditional financial institutions have historically struggled to service.”
The reason for such exponential growth in the funding space during a time of a technical recession, a drop in GDP and staggering unemployment levels goes hand in hand with banks implementing stricter lending requirements, deterring many SMEs from applying for funding. This leaves an enormous gap among underserved SA small businesses who need to access capital quickly and easily either online or using financing alternatives. In Merchant Capital’s case, Girnun explains that they have an innovative repayment mechanism linked to the merchant’s point of sale device – using monthly credit and debit card turnover as an asset for merchants to lend against.
Locally, the credit market has traditionally been dominated by a few main banks, and businesses that weren’t approved for funding didn’t have many options. But the landscape is opening up. While we are a smaller economy and just entering the space, Canada – which like SA has traditionally been dominated by a number of big banks – has been slow out of the gates when it comes to mass adoption of alternative funding. Yet the latest available figures (2017) show that Canada experienced a 159% increase in market volume to $867.6-million within a single year.
According to a report by Ernst & Young, the UK has 5.5 million SMEs producing a turnover of 1.9 trillion pounds, covering 51% of the private sector turnover in the UK, which has created a market with many diverse and complex funding needs.
In South Africa, SMEs have the greatest potential to reduce unemployment and raise South Africa’s GDP, which recently showed the biggest decline in a decade (3.2% in the first quarter of 2019). According to South Africa’s National Treasury, South Africa has an estimated 2.8m SMEs. One million of these are formally registered.
Girnun points out that in the new world of fintech funding credibility is a big thing. “The trust around a fast funding fintech model is still relatively new for SME’s, but there will be an exponential shift as this alternative moves to mainstream in the next few years. “It is often the company you keep that gives you the credibility that you need and comfort that a customer needs to have in order to use an alternative working capital option for the first time.”
The fintech caught the eye of RMI Holdings, which bought a 25.1 percent stake in September 2015. This significantly enhanced the scalability of the new disruptor and in 2018, it was announced that Standard Bank would formally offer SMEs the Merchant Capital branded lending capital solution – a move to close the gap for their small business clients.
Showmax launches half-price mobile streaming service
A new streaming product designed specifically for Africa, featuring TV series as well as African content and live sport, is aimed at filling the gap in subscription video on demand services
The subscription video on demand (SVoD) model, which originated in the USA, spread rapidly in countries where uncapped broadband is affordable and widely available. However, because the model also relies on consumers being comfortable with transacting online and having ready access to credit cards, it has barely scratched the surface across Africa.
On top of that, smartphones are often the only only form of Internet access across Africa, and none of the popular SVoD services have been designed for the format.
Showmax says it plans to change this with the launch of a new mobile plan that costs 50% of the standard Showmax package but still features 100% of the same video content. Showmax is set apart by a combination of four pillars: hit African content, exclusive international series, topkids’ shows, and live sport, including weekly matches from the English Premier League, Italy’s Serie A, and Spain’s La Liga.
Showmax says the new plan is aimed at consumers who only use smartphones and tablets to watch video content. Video resolution peaks at standard definition to help reduce data consumption. As it is a product aimed at individuals, only one concurrent stream is included in the plan. As with the regular service, it is also available for a 14-day free trial.
“This is all about an African service developing a solution that meets the needs of African consumers,” saus Niclas Ekdahl, CEO of the Connected Video division of MultiChoice. “Customer feedback consistently points to local content and sport as some of the things that people value most from Showmax. That’s of course on top of the international series, movies, and kids’ shows that are our bread and butter. With all of that content now available in a product designed specifically for mobile usage, we’re doing something no other service can offer.
“On top of that, with groundbreaking deals like our new offer with Vodacom in South Africa, we solve the credit card issue through add-to-bill payment and the data issue by including data directly in the package. We’re looking to launch similar offers in Kenya and Nigeria soon.”
Both the standard and mobile plans include live sport, sport magazine shows and sport documentaries. The 2019 Rugby World Cup Final was streamed live on Showmax earlier this month, and the following is a selection of some of the football due to be live-streamed in November:
22 November: Levante vs Mallorca (La Liga)
23 November: Arsenal vs Southampton (Premier League)
24 November: Bologna vs Parma (Serie A)
25 November: Aston Villa vs Newcastle United (Premier League)
29 November: Celta Vigo vs Valladolid (La Liga)
30 November: Fiorentina vs Lecce (Serie A)
30 November: Chelsea vs West Ham United (Premier League)
Showmax’s mobile plan is currently available in Nigeria, Kenya, and South Africa.
Comparison of Showmax plans:
|Price per month||R49 / N1450 / KSh 375||R99 / N2900 / KSh 750|
|Watch on smartphone or tablet||Yes||Yes|
|Watch on smart TV and computer||No||Yes|
|TV series, movies, kids’ shows||Yes||Yes|
|14-day free trial||Yes||Yes|
|Chromecast and AirPlay||No||Yes|
|Number of devices||One registered device||5 devices can be registered, with 2 able to stream at the same time|
For a 14-day free trial, visit www.showmax.com.
Online series wins SA’s Journalist of the Year award
A series of stories on gang warfare in Hanover Park earned Tammy Petersen of News24 the ultimate prize in South African journalism. Here are all the winners of the Vodacom Journalist of the Year awards.
At the 18th edition of the Vodacom Journalist of the Year Awards held at Vodacom World earlier tonight, News24’s Tammy Petersen took top honours and the R100,000 grand prize as national winner for her body of work on a gang war series entitled When you live in Hanover Park, you know death. Petersen’s submission was one of over 1,000 entries received from around the country across 12 categories – Investigative, Opinion, Lifestyle, Photography, Sport, Economics, Politics, CSI, Live reporting/ breaking news, Data Journalism, Multi-platform and the Young Journalist of the Year Award. This year’s theme – Connect the Dots – pays tribute to the best-of-the-best of those entries.
Takalani Netshitenzhe, Chief Officer for Corporate Affairs at Vodacom Group says: “This year has seen extraordinary entries to the 18th Vodacom Journalist of the Year Awards. Not all the stories that are national winners were about huge events but also showed the importance of telling the stories of ordinary people. In line with our theme, the dots were indeed connected, and we congratulate all the winners.”
Convenor of the judging panel Ryland Fisher says: “The quality of entries has convinced the judges once again that our industry is in good hands, as far as journalism is concerned, despite the many problems that have beset the industry in recent times. Judging from the entries, South African journalists are determined to fly the flag high for a free, independent, and vigorous media, which augurs well for our democracy. As judges, we can only salute all the entrants for the great work that they submitted. In the end, our industry is probably the biggest winner.”
Judges for this year’s awards are: Ryland Fisher (convenor), Jermaine Craig, Arthur Goldstuck, Albe Grobbelaar, Franz Kruger, Patricia McCracken, Mapi Mhlangu, Collin Nxumalo, Mary Papayya, and Obed Zilwa.
Visit the next page for the full list of winners and their citations.