Standard Bank partners with Yebo Fresh to empower township businesses

SA’s informal township economy is booming. All told, it contributes about R300bn to the national GDP. However, traders ranging from neighbourhood spaza shops and food hawkers to hairdressing salons and larger businesses are operating on a largely cash basis and are often unbanked. 

For years, the businesses that form the backbone of commerce in townships have operated from garages, street-facing rooms in houses, and even shipping containers as they bring essential groceries and commodities to their neighbourhoods, says Naledzani Mosomane, head of enterprise development at Standard Bank SA.

Also lagging has been e-commerce, primarily because digitally based business-to-business suppliers have difficulty communicating with independent traders, and because these businesses operate in environments where cash is used for most transactions.

“While providing an essential service through outlets across townships, these businesses face several operational challenges,” says Mosomane. “As they are largely cash based, they are vulnerable from a security point of view. Restocking shelves usually means closing the business and travelling to buy stock for cash. Operating margins are also low as these businesses do not benefit from bulk-buying options available to formal, shopfront retailers.”

Most seriously, she says, “as ‘cash is still king', businesses are precluded from the benefits of the formal banking sector and having the financial records and credit ratings that can make it possible to obtain loans and expand their businesses.”

To tackle this elusive market, Standard Bank launched an ambitious trader ecosystem centred on the new MyMoBiz solution currently being tested in townships in Gauteng and the Western Cape. Besides offering a dedicated, low-cost account as an entry point into traditional banking, MyMoBiz also addresses many of the difficulties faced by small businesses.

At the same time, the lack of a business-to-business, order-to-delivery, service catering for township businesses has now been addressed through a new, groundbreaking partnership between Standard Bank and Yebo Fresh.

Says Mosomane: “Forced absences from a spaza shop to buy stock mean lost revenue. To reduce these losses, the bank partnered with e-commerce company Yebo Fresh. With distribution hubs in both the Western Cape and Gauteng, the company offers traders a range of high-demand goods including electronic goods. Orders are delivered to business outlets, and if the value of the stock is R1,000 or more, there is no delivery cost attached to the service.”

Importantly, the businesses benefit from the Yebo Fresh's buying power with manufacturers and they get cheaper stock, thus increasing their operating margins. Deliveries are paid for through the digital MyMoBiz account, for which the trader pays a nominal service fee of R7 a month.

“The businesses are linked in further through a point-of-sale electronic device offered at a nominal cost. This means their customers also benefit because they pay low debit and credit card transaction fees,” says Mosomane.

Besides offering convenient payment options, the device can also broaden a spaza shop’s offerings by allowing it to sell airtime and electricity. The device even enables the spaza shop to facilitate withdrawals and cash Standard Bank instant money vouchers for its customers. This allows businesses to reduce the amount of cash they have on hand, which automatically reduces the risk that goes with cash.

One great benefit offered to traders is the opportunity to use the account as a springboard from which to apply for finance to improve the business once a financial transactions track record has been established.

Research indicates that:

• There are about 100,000 spaza shops across the country; 
• Collectively, these businesses generate more than R200bn annually;
• More than 50,000 takeaway food outlets have estimated revenues of R90bn a year;
• Other businesses contribute a further R45bn to the national GDP; and
• The spin-off is a growing rental market where homeowners and businesspeople rent out spaza space. This alone is believed to be worth about R45bn.

“We are excited about the potential our partnership with Standard Bank offers. We believe this will create an environment that will uplift township businesses, stimulate job creation and promote economic development in communities nationwide,” says Yebo Fresh CEO Jessica Boonstra.

This article was sponsored by Standard Bank.