Less than 70% of SMEs have access to credit. What is the importance of the South African SME sector?
SME’s are lifeline for employment as the unemployment rate in South Africa is very high, and the we can’t only rely on government or big private sector companies. It is logical to turn towards the companies that will employ 5 or 10 people to lower that unemployment figure.
In my opinion, SME’s will grow form a crucial part in South Africa’s GDP makeup but without access to work capital and credit, SME’s fail to grow. That is one of the biggest reasons they fail.
What have been the highlights achieved by Invoiceworx in this short time?
Invoiceworx is currently trying to define and find our own niche within the SME’s space. Partnering with big companies, and people that understand our methods and philosophy has been part of our success.
Our success is based on corporate connections. Invoiceworx tries to connect financiers and make it easier for them to lend to SMEs and vice-versa: the SMEs that don’t want to be weighed down with paperwork and bureaucracy.
What your award from Merryl Lynch for Alpha Code entailed? What advantages will it bring to you?
When we began in 2015, we were looking for a platform that could help SME’s access credit. But we couldn’t find a specific technology that bridged gap between lenders and SMEs. There is money in the market but not the efficiency to deliver the money where it’s needed.
In 2016 we joined Alpha Code, a cloud accelerator and the same year we entered the Merryl Lynch competition and won 1 million Rand to accelerate our growth. That allowed us to formalize our company and gave us focus.
You work for SME’s but you also need solid partnerships from big multinational lenders. How do you establish those partnerships?
We are part of the RMI (Rand Merchant Investment Holdings) family, which owns part of Discovery, Outsurance, FNB and Westbank. Being part of RMI give us access to all those corporates. We would like to dominate the asset management space to give entrepreneurs choice.
Are you engaged with the government lenders as well?
We are engaged with government fund organizations as well. The National Empowerment Fund (NEF) is one of our partners and IDC (Industrial Development Corporation) is one of our clients.
We started as a consultancy company to the DFI, the NEF, the IDC and others. But we are selling speed and efficiency, and sometimes this makes it difficult to do a large volume of business with them. Also, some of them are not ICT ready for our platform. As much as we are in dialogue, it will take some time.
What are the incentives for private banks to connect with SME’s through Invoiceworx instead of their traditional multinational clients?
We work where banks are shy. For instance, we are putting together a financial inventory product for townships, parcel shops and shipping, and we monitor the stocks for them throughout; from ordering to selling. Banks understand the market but they don’t want to invest, so in partnership with the banks, we can access township markets, which drive the economy.
Are you already present in the rest of Africa?
We are hoping to scale across Africa, but our geographic priority is getting South Africa right. If we can do that, especially with some of the lenders that already have an African footprint, we can then grow our business.
One location we find interesting is Kenya because they have prioritised ICT as one of their pillars of growth.
Which sectors represent the most opportunities for the SME’s?
We want to contribute to township revitalization in different cities. We want to provide access to capital for the trader market, helping clients in which banks don’t see potential.