The fintech landscape in South Africa has rapidly evolved over the last few years, closing the funding gap and alleviating cash flow pressure for many of the country’s small businesses. The concept of borrowing has, as a result, been transformed, and exciting new innovations are continuing to have an impact.
Increasing Financial Inclusion
Early-stage business owners in South Africa may face difficulty accessing funding from traditional financial institutions due to the latter’s checks concerning, for example, liquidity, credit scores, current ratios, debtors, and creditors. However, entrepreneurs such as David Mouko Elizaphan Omaanya recognize that the emergence of new fintech business funders is providing the solution and helping small businesses in South Africa to unlock the capital they need.
Instead of using ‘traditional’ metrics to assess the businesses of entrepreneurs such as Elizaphan Mouko, these funders are deploying holistic assessments of creditworthiness, using API-driven, real-time analysis of alternative data points, boosting financial inclusivity as a direct result.
Speeding Up the Process
As well as opening up access to funding for more businesses across South Africa than ever before, fintech advances are significantly speeding up the process whereby a business obtains capital. Whereas traditional bank loans can still take weeks to approve, fintech solutions allow businesses to apply and be approved for credit within a matter of hours. By doing away with long-winded application forms and the need for manual oversight, fintech is streamlining financial decisions, to the advantage of both funders and small businesses. This enables entrepreneurs and small businesses to respond swiftly to changing market conditions and new opportunities by giving them access to funding when it’s needed.
There are now fintech funders on the market that enable their clients to connect their accounting platforms to their bank accounts – this allows for instant access and an overview of the business, further promoting financial inclusion.
Boosting South Africa’s Economy
It is expected that the rise in fintech companies and technology will boost the South African economy, making it easier to do business and giving small businesses access to seamless funding opportunities. Given that, according to the National Credit Regulator, the inability to access funding is one of the key reasons most small businesses don’t make it past their first two years, the rise of fintech is likely to make a tangible difference to the country’s business landscape.
Take a look at the embedded PDF for more information about how fintechs are changing the world of business on the African continent.
