SA SME Fund invests in A2Pay to finance spaza shops
The fund, born of a partnership between the government and CEOs, will facilitate the financial inclusion of 10,000 spaza shops across SA
On Tuesday, small-business investment house, the SA SME Fund, said it has invested R25m in A2Pay SA, a fintech fund manager that focuses on growth and trade financing for spaza shops.
The fund, which was born out of a partnership between the government and local CEOs aimed at stimulating the economy and creating jobs, said it will provide finance for 10,000 spaza shops across SA, and create more than 40,000 jobs through its investment in A2Pay over the next 10 years.
A2Pay, together with the Jobs Fund, provide small businesses with trade financing options. Business owners can borrow R50,000, for example, purchase stock items, trade and pay back the initial loan when the stock has been sold. Transactions are then recorded electronically and a credit history built for each business owner through A2Pay’s in-store terminals.
The SA SME Fund’s CEO Ketso Gordhan, speaking at the launch event at Sisters Tuck Shop, a spaza shop using the A2Pay system in KwaMashu, Durban, said, “The SA SME Fund investment leverages the initial funding of A2Pay by the government’s Jobs Fund, which seeks to spur innovation and investment in activities that directly contribute to sustainable job creation and growing small businesses.
“This is a brilliant collaboration that will have a profound impact on the lives of small business owners in SA.”
The shareholders of the SA SME Fund are 50 of SA’s largest companies, and include Absa, Telkom, Discovery and FirstRand and the Public Investment Corporation (PIC). The fund was started with R1.4bn, R1.2bn of which is investable capital. The remainder is for the running costs and operations.
Gordhan said R1.1bn been invested so far.
Tina Mason, COO of A2Pay, said, “We began this journey by implementing a pilot project that culminated in us disbursing R3m in 78 capital loans to 48 spaza shop owners. The combination of the loans, technology, and training has resulted in a 25%-30% sustained increase in their revenues, and some of the spaza shop owners have even opened up second stores.”
In addition to the money invested so far, Gordhan said the SA SME Fund hopes to bring on board more investment from other players to increase the number of loans available to business owners.
Correction: February 11 2020
An earlier version of this story incorrectly stated that the SME fund was started with R1.5bn; it was started with R1.4bn.