Edition: August/October 2018
Financial literacy at work for the poor. Bring on greater dignity and bigger markets.
There are two contrasting perceptions of SA, rarely to mix. They’re as distinct as oil from water.
One is in the quagmire of crime, corruption, unemployment and unsatisfied expectations in an environment of economic shrinkage. In political speak, racism stereotypically intrudes. Dominating airtime, it’s the stuff of depression.
The other is its polar opposite, of South Africans harmoniously progressing across the lines of class and colour. Because it happens in the ordinary course of daily lives, it usually grabs attention only on the occurrence of an exceptional event; no better example suffices than the new-look Springbok rugby team. This is the stuff of inspiration.
Yet there are myriad other examples, less dramatic but no less profound, that bypass the public eye. Take the successful incubation of 28 micro businesses in some of SA’s poorest rural areas.
At present the magic isn’t in the number of businesses, encouraging although it is for this pilot project of the Association of Savings & Investment SA (ASISA) Foundation. Rather, it’s in the promise.
More than this, it’s in the pervasive spirit of jubilation and enthusiasm that greeted the match of help from financial institutions with self-help by black participants.
Dressed to the nines for a mid-June morning celebration in Sandton, supporters arrived in droves – from the townships of Hammanskraal and Soshanguve, Ga-Rankuwa and Rustenburg – to sing and cheer each nominee for a certificate. It was, in miniature, a vociferous demonstration of the communal thrust behind smaller entrepreneurs as generators of jobs.
Also more significant than the numbers is groundwork laid for the project to gain traction and scale. This will require money; the more the better for the experience to be replicated.
A non-profit organisation, the foundation is funded by ASISA members mainly comprising life offices and asset managers. National imperatives aside, they serve their own business interests by stimulating a future generation of savers and investors.
Similarly with the banks and short-term insurers.
They too are in line to earn scorecard points from the Financial Sector Code under such categories as enterprise and supplier development as well as empowerment financing and consumer education. If there are to be problems, money shouldn’t be amongst them.
This programme of the ASISA Foundation is called Flame, standing for financial literacy and micro-enterprise. As foundation chief executive Ruth Benjamin-Swales puts it: “Unless we provide our most vulnerable groups with the skills, tools and opportunity to create an income, there is little point in teaching them the importance of saving.”
FROM SMALL ACORNS...
During her nine months on the incubation programme, 27-year old Zanele Ntuli transformed her family’s farming co-op into a profitable operation able to pay its members a salary for the first time. The coop, on a smallholding in Soshanguve, grows jalapenos and spinach for agricultural aggregators which in turn supply national retailers.
Applying the financial concepts learned, she recorded a R90 000 profit for the nine months. It enabled her to employ another eight people, increasing her staff to 12.
Ntuli has also created learning opportunities for other young black farmers through partnership with a local vocational college.
Brainchild of Thuto Legwale is the Segaetsho cultural village near Sun City. A multicultural experiential centre, it’s created employment and market opportunities for surrounding communities.
Through his involvement with the Flame programme, Legwale has become an enterprise-development partner of Sun International.
Then there’s the Kgetse Ya-Tsie Primary Co-op, owned and managed by Caroline Mathibe. A sewing business in Soshanguve, Mathibe has diversified her limited range of garments to supply customised items for school uniforms in the area.
During the nine months, her monthly profit has increased from R4 000 to almost R40 000. With this she’s increased her staff and used her seed capital to buy more sewing machines.
Of the 28 businesses, little more than a year ago they were mostly good ideas or fledgling micro enterprises. Today they support 83 jobs, half of them new, and affect at least 200 dependents. The businesses range from construction to farming, day care for children and production of raw honey. Thanks to the programme’s networking capacity, the services of some are already being procured by large corporates.
During the nine-month incubation period, the businesses increased their profit margins by 10% to 35% for a total turnover R2,2m. All are now able to cost their products, record their incomes and expenses, while some have opened separate business bank accounts.
In the post-incubation phase, Flame will regularly check on the progress of each business. Further to entrench the financial education into sustainable financial management, each entrepreneur is asked to submit monthly financial data and projections for profits or losses. It will also look for opportunities to increase market access.
Such activity is people-intense. It requires funding not only for continuity and seed capital but also for the face-to-face coaching that’s shown to be the most effective teaching method. Critically too, it’s for the programme to convert from a pilot to an exercise of scale so that the multiplier effects accelerate.
Complemented by other private-sector initiatives – the Masiszane fund of Old Mutual amongst them – imagine its application through hundreds if not thousands of communities. And further imagine the potential for lives improved, a tax base extended and an unemployment rate dented.
Then wonder whether this exercise isn’t a whole lot more beneficial for broad-based black economic empowerment than the JSE-listed companies’ shares disbursed, frequently at the expense of pension funds’ dilution, to enable consumption by a favoured many or enrichment of a selected few.