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Expanding Micro-lending with Mobile Banking
Mobile banking is transforming the way people access financial services, allowing those in remote or rural areas not served by a traditional bank to send and receive payments with the push of a button.
IFC is supporting improved access to financial services across Africa and has partnered with WIZZIT bank, which is bringing secure and efficient mobile banking to hundreds of thousands of people in South Africa.
Since 2004, WIZZIT has offered South Africans a low-cost, transactional bank account that uses cell phones for making and receiving payments, together with a MasterCard-branded debit card which can also be used at ATMs and point-of-sale devices. About 400,000 people in the country have opened accounts with WIZZIT.
Building on this success, IFC is helping WIZZIT expand its range of services to allow users to access microloans through their phones, for personal use or to grow their small businesses.
Improved access to finance is especially important for micro and small and medium enterprises in South Africa, where only 10 percent have access to loans, according to research by Finmark Trust. Millions of micro entrepreneurs in South Africa struggle without the funding they need to grow.
WIZZIT’s microloan pilot project is underway in two townships in South Africa, Alexandra and Hammanskraal, where WIZZIT has disbursed more than 350 loans valued between 2,000 and 10,000 Rand ($285 to $1425) to businesses.
“WIZZIT is grateful for the IFC’s and SECO’s support in
our efforts to bring productive loans to communities and businesses in South
Africa that do not have full access to financial services. Based on this pilot
project, we are hoping to further improve and extend our loan program,” said
Ephan Bosman, Managing Director of WIZZIT Bank.
Khomola Freeda is one of the beneficiaries of a small loan from WIZZIT which she used to buy stock for her hair salon, improve its security, and install a new tile floor. WIZZIT also gave her advice on keeping better accounting records and on formalizing her business.
Thanks to this additional support, Khomola took a second loan, which she used for a manicure and pedicure course and to buy equipment to expand her business. The results have paid off handsomely. Six months after taking her second loan, her revenue has jumped by two thirds.
“The loans from WIZZIT bank helped me to improve and expand my business,” Khomola said. “I have had it for 11 years now and was surprised to see result of those two loans in such a short period of time. I am very interested to take my relationship with WIZZIT further, especially as my salon is so far away from any bank branch.”
The pilot, which is also supported by the Switzerland’s State Secretariat for Economic Affairs (SECO), is part of IFC’s Sustainable Business Advisory Services work on Farmer and SME Training, which aims to increase the ability of SMEs to expand access to growth markets by strengthening their management capacity.
WIZZIT is currently considering expanding the microloan program, based on the results of the pilot. WIZZIT is also launching a College of Entrepreneurship, a much needed facility to uplift and empower SMEs.