FNB wants a piece of the massive township economy

First National Bank (FNB) has partnered with Selpal, a South African FinTech company that operates specifically in the township and informal economy.

Michael Vacy-Lyle, CEO of FNB Business said that with 50% of South Africa’s urban population living in townships, the ecosystem supporting these communities warrants significantly greater focus from the banking sector.

He said that businesses in the informal sector or the township economy range from survivalist businesses too often highly organised and sizeable SME operations.

Statistics show that there are around 30-40 businesses per 1,000 people in townships. FNB estimates that this translates into around 800,000 to one million businesses.

The majority of these are survivalist businesses, with around 300,000 representing entities employing three or more people. “FNB believes that these businesses are under serviced from a banking perspective mainly due to cash being the predominate form of payment for them,” the lender said.

“Access to financial services is critical for the growth of any economy and these businesses should be included into the financial system. Transactional banking, investing, lending and insurance opportunities exist in this unseen space” said Vacy-Lyle.

Selpal has developed an integrated system that connects informal retailers such as spaza shops (community grocery stores) with FMCG (fast moving consumer goods) suppliers, wholesalers and brands. The user-centric platform was designed and built using direct observations, engagements and understanding of the pain-points that various users experience along the entire FMCG value chain in the informal sector, from manufacturer to consumer.

“Selpal is an agnostic virtual distribution platform which electronically enables the way in which products are ordered, paid for and sold in the unseen economy. Using proprietary hardware and software that we have developed, we are creating a network of partner store traders which we equip with a Selpal POS (point-of-sale) device that lets them view, order, pay for and sell stock and value added services without the store-owners ever needing to leave their shop, and unlocks extra revenue for them,” said Selpal CEO and co-founder, Stephen Goldberg.

Most townships have businesses operating in the following main sectors:

  • Grocery retail / “spaza shops” and the supply of fast moving consumer goods;
  • Taverns / “shebeens”;
  • Hair care;
  • Motor and cellular repair and service;
  • Educare; and
  • Micro-manufacturing.

In due course, FNB together with Selpal intends addressing the needs of all these sectors.

The largest opportunity presents itself in the FMCG space – spaza shops and other retailers. These businesses tend to employ three or more people, but are largely run on a cash basis and are often unbanked. There is a clear need to provide cost effective and safe financial solutions into this space.


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