A South African startup aiming at digital inclusion of frontline employees has raised $2-million (R29m) in seed funding. SmartWage is described as “an innovative HR and communications technology startup”, and has a vision of transforming Africa’s workforce through digital inclusion, particularly for frontline employees like cashiers, restaurant staff, security personnel, and healthcare workers.
SmartWage says it is giving enterprises a simple yet effective way to digitise their most time-consuming HR processes, helping them save time and money in order to focus on people. The product gives employees without email the ability to use WhatsApp to receive company-wide communication, access their payslips, request leave and get access to financial wellness products.
According to the company, 90% of frontline employees don’t have or don’t use email, while 97% of formally employed people in South Africa use WhatsApp.
SmartWage CEO Simon Ellis says that no solution adequately addresses the challenge of communicating with a distributed workforce, leaving employers unable to digitally transform.
“There is a communication gap,” Ellis says. “Frontline employees don’t feel part of a company’s brand and its promise. Payslips and leave are still done manually with paper printouts, while employee communication is done using notice boards or apps, which have huge usage drop-offs. Onboarding and disciplinary procedures are still paper-based, costing businesses precious time, money and resources”.
But it’s not only about driving efficiencies for employers, he says. SmartWage has developed a range of financial wellness products that give employees a financial lifeline, including access to free financial education and on-demand pay.
“We have learnt through our process that employees need access to cash more than ever before. 80% of South Africans struggle to make it to the end of the month without relying on some form of short term debt, and the payday loan industry is booming.
“If we can save employers time and money through digitalisation, we can bridge the gap between South African enterprises and their frontline employees, helping enterprises connect clearly and dynamically with their employees, whilst offering financial wellness tools at the same time. By offering tools that benefit both employers and employees, we have a powerful value proposition”
SmartWage was founded in May 2020 by Simon Ellis and Caroline van der Merwe, an expert in employer benefit programs. She says existing software like Sage, SimplePay, Workday, and Oracle have been built for those with email, smartphones and computers, which makes communicating and providing necessary HR services to frontline employees a real challenge.
“Most large companies that employ frontline employees haven’t found a viable way to digitally engage and communicate with their employees, which also means that HR is still largely paper-based and cumbersome,” van der Merwe says.
The seed funding was accessed via several influential investors. One of those is Idris Bello, founding partner of LoftyInc Capital, a pan-African VC fund headquartered in Nigeria, and an early investor in Flutterwave and Andela, two of Africa’s tech unicorns. Bello said he was excited by the scalability of the SmartWage product set and the impact it could have, in both Africa and beyond the continent.
“The team at SmartWage are innovators,” he says. “They’re building more than just an earned wage access product, and have recognised that in order to make a tangible impact on employers, they need to build a powerful way for employers to engage with their workforce.”
Other investors include Creator Collective Capital, Penrose Capital, and several individuals.
SmartWage clients include companies that employ frontline employees, typically in retail, quick service restaurants (QSR), manufacturing, construction, and hospitality. They have grown their monthly active user base 14-fold in the past 12 months, and now work with brands like Edgars, KFC, Debonairs, Seattle Coffee, Truda and Twizza.