The Reserve Bank has given the thumbs-up to the tie-up between Access Bank and a Cape Town-based fintech start-up, Sava, adding another digital player in the small business banking industry.
“We are thrilled to have received the necessary regulatory approvals, enabling Sava to transform the SME banking landscape in South Africa,” said Kolawole Olajide, CEO at Sava.
“Our platform addresses the unique challenges faced by SMEs, serving diverse businesses from traditional sectors to emerging fintech players, empowering them to thrive in an increasingly digital world.”
The duo have also completed industry testing, integrated into the National Payments System, and jumped the regulatory hoops set by the Financial Sector Conduct Authority and the National Credit Regulator. Its finances have undergone an audit with Deloitte.
For Access Bank, the regulatory nod boosts its service offering in the SA market. The bank, which has been operating in SA since 2021 when it acquired Grobank, employs more than 8,400 people in Nigeria. It also has 16 subsidiaries elsewhere on the continent and the UK, as well as representative offices in China, Hong Kong, the United Arab Emirates, India and France.
Sava’s Payment Transaction System has clients in SA, Nigeria, Kenya and Egypt. Its platform arms businesses with digital accounts, rule-based cards — both physical and virtual — invoicing management and custom workflows turbocharged with artificial intelligence (AI) and accounting integrations.
SMEs account for 60% of all jobs in Africa and contribute up to half of some countries’ GDP, yet they often operate in cash-based economies and face a staggering $330bn financing gap, according to the World Bank.
Small business in SA holds significant sway over the economy. Research shows that before the pandemic wreaked havoc on the sector with limited cash buffers, small businesses accounted for just over a fifth of the country’s business turnover of nearly R11-trillion.
The decision by the Prudential Authority, the Bank’s banking watchdog, to grant the duo regulatory approval pits them against established players and newcomers in the small business sector, including Capitec, Sasfin and TymeBank’s Retail Capital.
Capitec, already a household name known for its low-cost banking services, entered the small business market in recent years with the acquisition of Mercantile Bank. It launched low-cost point-of-sale card machine packages last year.
Business banking head Karl Kumbier said at the time the firm looked to unlock the potential of SA’s formal and informal business sectors, with Capitec’s unsecured lending roots standing it in good stead to attract informal traders.
“The formal market has about R400bn of lending. We will target that. Nobody knows the size of the emerging market, but there is a good opportunity there as well. We have spent 18 months in Thembisa [a township east of Gauteng] to understand the market,” Kumbier said.
“What we have found is that the informal sector has basic needs. One is an affordable bank account and the other is when there is a bank account, how does one accept payment electronically. As businesses collect more payments electronically, we are getting data of what is coming in and we can start building a profile so we can lend money to that business when the need arises.”
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