Lesaka Technologies – Championing financial inclusion in informal communities
South African fintech, Lesaka Technologies, is championing financial inclusion across South Africa’s informal markets and steadily building a leading position in these fast-growing, previously underserved communities.
Listed on the NASDAQ and JSE with a market cap of R4.5 billion, Lesaka is currently one of the largest technology-focused companies in South Africa.
The Group uses proprietary banking and payment technologies to distribute low-cost financial and value-added services to small businesses, primarily in the informal sector, as well as to consumers, the majority of whom are grant beneficiaries and have largely been excluded from financial services.
More than 72,000 informal retail merchants currently use the Group’s cash management solutions, bill payment technologies, value-added services, business funding and card acquiring solutions – which essentially allow individual merchants to become a stand-alone financial hub where their value-add products and services directly drive customer growth.
On the consumer side, Lesaka provides unsecured credit, transactional banking, and microinsurance to 1.3 million customers through its EasyPay Everywhere brand.
“We aim to help merchants in the informal and township economy compete and grow their businesses,” says Lincoln Mali, Lesaka SA CEO.
“On the consumer side, we work hard to help grant beneficiaries improve their lives, so we focus exclusively on this space.”
“All our attention is devoted to understanding their needs and creating relevant and affordable products and distribution networks for them.”
“Competition to serve grant beneficiaries will change the grant payment space for the better and enable individual customers to choose their bank based on factors that matter to them such as service, products, price, or convenience,” adds Mali.
“Most of the 12 million grant beneficiaries are withdrawing their grant out in one transaction. That can’t be regarded as financial inclusion as grant beneficiaries still don’t enjoy access to the financial system for their payment, transactional, credit, savings, and insurance needs.”
A fintech leader
Lesaka’s acquisition of the Connect Group has been a game changer for its merchant business.
Connect Group CEO Steven Heilbron led a private consortium in 2013 in acquiring a cash solutions business, then oversaw the successful acquisition of Kazang in 2020, providing an exclusive highway into South Africa’s informal markets through which the business could deliver multiple product and service opportunities.
Heilbron is adamant that South Africa’s future prosperity lies with small businesses.
“Our focus is to resolve the pain points that micro, small and medium merchants experience using financial technology as an enabler,” says Heilbron.
The company provides merchants with a POS device that is linked to a digital wallet from which they can pay their suppliers, sell many products such as airtime and electricity, settle customers’ municipal bills, and take customer payments via card – providing instant settlement to the wallet.
Merchants are also able to access funding and an electronic smart vault via the device. These smart vaults are processing and digitalising up to R10 billion per month.
Kazang Pay, a spin-off of Kazang, which launched in late 2021 with just 300 clients, currently has over 42,000 clients.
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