The founders of Take it Eezi, a company that provides community service payphones and sells airtime and electricity through a network of over 40 000 home shops, has expanded into co-operative banking.
Known as Flash Mobile Cash this new banking platform enables South Africa’s army of home shop owners to act as a bank for themselves and their families.
Flash is not the next Capitec or African Bank. It is not a new generation Mzanzi account or M-pesa. Flash gives the home shop owner the tools to be the bank for his family and friends within the co-operative structure.
That’s because it is enabling communities of people to withdraw; deposit; or borrow small amounts of cash right where they are, in the heart of the township.
“Our purpose is to improve the financial positions of the home shops and their families,” says Charlie George, Flash Co-operative Chairman and township resident. “It’s time for community to build community.”
Transactions are tracked and recorded using cellular infrastructure. The shopkeeper, as the banker, transacts using a GSM-enabled device supplied by Sharedphone that looks like a regular telephone. She/he can dispense cash (using the shop float for funds); take deposits; and provide savings and loans.
Co-operative banking members need to SIM swap to a specifically designed SIM starter pack which enables their savings and transaction accounts. Non-members can collect cash at any home shop using a reference number. Members can keep their phone numbers. With this in place they can transact using their pay-as-you-go cell phones.
“The beauty of the new offering is that these home stores are situated in parts of the country where there is little or no banking infrastructure; where access to goods is expensive; and job opportunities don’t exist,” says Peter Berry, Flash Co-founder and a Director of Take it Eezi.
A pilot project, launched on the Cape flats in August, has seen Flash sign up and install more than 700 Sharedphone ATMs, to service the home shop families in that area. “In September about R2.7-million was transacted – in the form of deposits; withdrawals; transfers; and savings. Every street in the townships and rural areas should have a Sharedphone ATM. We intend to rollout 15 000 new home shops with our current stock, and 100 000 by this time next year,” says Berry.
Flash is registered with the Savings and Credit Co-operative League of SA (SACCOL). “Our role is to represent the co-operatives, to provide them with developmental services and to regulate them,” says Musa Mbingo, General Manager of SACCOL. “We ensure that the co-operative is owned by the people themselves. We help them to comply with the necessary legislation, such as the Co-Operative Banks Act.”
The Co-operative Banks Act attempts to bridge the divide between the ‘banked’ and the ‘un-banked’ by providing a sound legislative framework within which co-operative banks can provide financial services to their members. While Co-operative Banks have to comply with certain prudential requirements, these prudential requirements are less stringent than those imposed on banking institutions registered in terms of the Banks Act, 1990, according to a note released by attorneys Cliffe Dekker Hofmeyr.
“We ensure that members’ funds are safe,” says Mbingo. “For instance we ensure that rules are adhered to that see that one member cannot just withdraw all the funds. “Co-operative banks like Flash have an important role to play. For instance Flash members are small home shop keepers and their families. By running a co-operative bank the home shop keeper is able to borrow from the community to buy new stock – cash flow is a problem for these small shops and limits their ability to grow.”
The business model is innovative. Flash Mobile Cash provides the infrastructure at no charge to the co-operative. Instead it expects to benefit as wealth in the townships grows and more people buy electricity and airtime. Money transfer between Flash users is free.
The home shop owner can earn a transactional fee from her banking services. “It’s her bank, to support her family and other home shop family members,” says Berry. She also earns a commission each time a member recharges their airtime or electricity on the Flash SIM cards she sells, or on money transfers she facilitates. Because residents can do their banking and buy airtime and electricity all in one place, her shop volumes are likely to increase.
The overheads incurred in running this co-operative banking scheme are low, which means the co-operative can afford better rates on savings and loans. At the end of the year profits of the co-operative from the community’s savings and loans are paid back to the home shop owners and their families who are the members.
Flash may be pioneering a different banking model in South Africa. But in many ways it brings back to communities an old fashioned quality: “The common bond, or the relationship between the community members, is crucial,” says George. “It is the corner-stone of co-operative banking.”
