South Africa’s largest retail house, Shoprite, has made a foray into the lucrative point-of-sale machine sector, where the likes of Pepkor and Capital have significant exposure, as a scramble for the informal market wallet intensifies.
Shoprite on Monday said it had bought a majority stake in R&A Cellular for an undisclosed amount — looking to make inroads in the informal market, including spaza shops and other informal merchants in townships and peri‑urban areas.
“R&A Cellular has built a sound business with a strong management team and a platform that is well regarded in the market,” said Jean Olivier, GM for financial services at the Shoprite group.
“By combining our scale in everyday financial services with R&A Cellular’s established presence in the informal retail space, we are creating a practical way to expand access to essential services, lower barriers to participation and support the communities that rely on informal retailers every day.”
South Africa’s informal market has been a big drawcard for companies looking to diversify their revenue streams.
A study by Standard Bank into the informal economy finds eight out of 10 businesses in the sector are unregistered, making access to finance to grow their enterprises impossible.
The survey zoomed in on businesses raking in R100,000 to R50m annually in the economic hubs of Gauteng, the Western Cape, KwaZulu-Natal and mineral-rich North West.
One area Pepkor also identified as a growth vector for the next few years is South Africa’s vast informal sector.
Shoprite is not the first retail group to venture into the informal economy payments architecture.
Pepkor’s early investment in fintech group Flash 17 years ago has paid off, with the firm now available to about 175,000 informal traders around the country.
Flash collaborates with top brands and businesses to offer quality products and services to the informal sector, and with cash still king in this segment, the company has been gaining traction in South Africa.
Flash leverages connectivity and smartphone access to extend reach beyond traditional retail through a technology-driven business-to-business and business-to-customer business focused on empowering informal market traders with smart technology solutions.
For Shoprite, the investment in R&A Cellular, which enables informal retailers to offer prepaid airtime and electricity, gaming and entertainment products, as well as card-based payment acceptance, the transaction deepens its already significant exposure to township and rural economies.
“By aligning with the Shoprite Group, we are combining deep retail scale with our technology and prepaid expertise to accelerate financial inclusion and unlock greater value for traders and communities across South Africa.
“Together, we are building a more accessible, digitally enabled retail ecosystem,” said Rui Campos, founder and CEO of R&A Cellular.
Capitec, which is targeting the informal economy to build its business banking proposition, has refined and taken to market competitive fees and commission on its point-of-sale machines.
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