Finance

Nedbank hails products for farm workers as it banks on small businesses

Former farmworker Rita Andreas says Picsa's financial products could change the lives of many. Photo: Supplied

She's so well put-together, you might forget that the stately middle-aged woman with the perfectly coiffed hair literally used to get her hands dirty for a living.

Rita Andreas has spent a large part of her life as a farm worker, helping to produce the wine-yielding grapes for which the Western Cape is so famous for. Nowadays she's a consultant to farmers in the area and works at the local municipality in the human resources department.

"I started out as a farm worker but today I'm a boss," the 50-year-old says. "I'm going to be Minister of Agriculture," she added confidently. National minister or provincial? "National," she says without hesitation.

Part of the reason for Andreas's pride is why we're here today. Nedbank has invited a coterie of journalists to the winelands to witness the success of a company which aims to help farm workers gain greater financial security.

Picsa is the brainchild of a Swellendam farmer who tried to help his workers get out of the poverty trap so many low-income people face, often ending up penniless in their retirement. Nedbank and Picsa crossed paths after the latter joined a business incubation centre sponsored by the banking giant.

Picsa relies on a simple business model, said Picsa CEO Paul Kim. It wants Picsa agents to become like private bankers to its low-income clients. For example, workers can access the bank's agents directly via WhatsApp with their problems and queries. They also go from store to store to find the most affordable appliances and household furniture for clients and then deliver the goods to them personally.

So far Picsa's services have been rolled out to more than 1,000 workers and 20 employers, mostly in the Drakenstein, Witzenberg and Grabouw areas and there are plans to expand that in the near future. How it works is that employees' savings are pooled in a stokvel administered by Picsa, allowing for the bulking of transactions and thereby access to lower prices.

The product offerings include a savings plan from as little as R25 per month; credit in the form of debt consolidation, retail loans and small cash loans; retail services where Picsa sources products from outlets and funeral cover through a partnership with Sanlam's Safrican division, which offers a discount of up to 80 percent on premiums.  

There are different costs attached to the services but Picsa charges fewer and lower fees than it is allowed by law, unlike most creditors.

"We've always been progressive on farm worker development. That's the general trend of successful big farms."

"The idea definitely is to grow the impact that we can have but never at the expense of client experience," Kim said at a panel discussion at the Au d'Hex wine estate in the picturesque Wellington. "It's very easy to grow across the country and charge the prices we want to charge but we never started the business with that intent. We wanted to ensure through and through that the client that we're serving gets the best value."

The narrative is certainly a refreshing one from the tales of abuse, evictions and desperate poverty suffered by farm workers. This region was the scene of violent protests back in 2012/13 when hundreds of farm workers protested for higher wages.  

This is slave territory marked by a bitter history, whose impression still haunts the chasm between those who own acres of land, living side by side with those who have never owned any.

But the needle is shifting slightly in some parts. Farmers seem to have realised that the old exploitative feudal system of agriculture is not sustainable in the democratic era.

Petrus Bosman's family has owned land in this region for more than 200 years. In 2008, they launched a workers' trust which now co-owns the land.

"Business isn't rocket science. People like John, Rita, they make a massive contribution to the business," Bosman said after taking part in the panel alongside Andreas and fellow farm worker John Hartnick.

"We've always been progressive on farm worker development... That's the general trend of successful big farms."

 

LaunchLab gives hope to startups

Such success will hopefully rub off on other entrepreneurs. That was the message recently as Nedbank feted the three-year anniversary of the incubation centre at the University of Stellenbosch, which is co-sponsored by Nedbank and the Department of Trade and Industry.

By last year the university's LaunchLab had housed 63 companies which employed more than 100 people. The businesses range from ice-cream companies to one which launches satellites into space.

The lab is part of a project which the bank plans to roll out to other campuses in the country.

"The sheer volume of exciting ideas and entrepreneurs we engage with in the LaunchLab gives us a great sense of comfort that South Africa is firmly poised not just to participate in the global innovation arena, but to lead it," said Chris Wood, Executive: Emerging Payments, Strategy and Regulation at Nedbank.

There is evidence that Nedbank puts great stock in SMME development. Aside from splashing out R6.5 million on the LaunchLab, Nedbank says it has over the past three years invested over R20 million in enterprise development assistance to more than 2,000 emerging black SMEs.

This included spent R2.4 million on developing SMMEs as part of the Expanded Public Works Programme. The spin-offs? Nearly 3,000 job opportunities and R41 million in loans over five years, none of which was written off.

By comparison Barclays Africa said in its 2015 annual report that it has set aside R250 million in enterprise development funding for SMEs in corporate supply chains. Standard Bank said it had invested R25 million in such initiatives. First Rand, which owns First National Bank, has funded the Vumela Enterprise Development Fund to the tune of R186-million since 2010.

Nevertheless, there have been questions about whether all this money is being well-spent. Business incubation centres, for one, have been accused of failing to live up to their promise by not offering entrepreneurs the expertise they need to make it in the real world.

“The entrepreneurs and businesses that demonstrate potential are then provided access to funding and the market through our network of corporate clients, private and government funders and other industry players."

LaunchLab could also be criticised for hosting only one black entrepreneur and being located at one of the most exclusive universities in the country.

But the centre's CEO Philip Marais counters that the LaunchLab is equipped to assist budding entrepreneurs.

"We are not interested in being landlords... we are more interested in how we can help our residents with understanding their purpose and how this relates to the businesses they run," he said.

"We also offer and plan to offer world-class programmes supported by access to experienced mentors and coaches. The entrepreneurs and businesses that demonstrate potential are then provided access to funding and the market through our network of corporate clients, private and government funders and other industry players."

It could also be argued that LaunchLab's location is somewhat elite, as evidenced by its accommodation of business stalwarts like former First National Bank CEO Michael Jordaan. To wit, both Jordaan and Picsa's Kim are Stellenbosch University alumni.

But Marais says universities are ideal for its purposes.

"Research shows that the likelihood of becoming an entrepreneur is directly linked to level of education. Universities are for this reason the best place, in our opinion, for finding our future entrepreneurs and business leaders.

"At the same time the LaunchLab is promoting entrepreneurship at a grassroots level on the campuses that we operate on. We reject no one, including community entrepreneurs that come across our path. All are welcome to attend our training programmes and many have. They may not end up in a LaunchLab facility but we at the LaunchLab see it as a privilege to help them on their journey."

Whatever the merits or demerits of the concept, the LaunchLab has helped give birth to the likes of Picsa. And, if all goes well, that could help break a cycle of misery that has been passed on from generation to generation.

"There's a huge difference. Some of the workers were not very happy about it (saving with Picsa)," Andreas told GetBiz.

"After four months they were shown the statements. They wanted to save more."

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