With a population of over 60 million and a high mobile penetration rate of 180 per cent, there’s a ready market for the money lending business. Financial inclusion in the country is still a challenge as 32 per cent of the population has no access to financial services, including bank accounts and loans.
South Africa’s banking sector has largely been controlled by four major banks with over 80 per cent market share. The lenders have not been unwilling to take risks to lend to small and medium enterprises (SMEs), disadvantaging them. This has resulted in almost a third of the population being locked out of credit needs.
The gap left by banks has been filled by alternative lenders targeting low-income earners. 89 per cent of this section of the market have mobile phones, with 39 per cent being smartphones. This means they can access online financial services.