Against the backdrop of a global financial crisis, consumers are beginning to look at alternatives such as Person-to-Person or social lending.
“This new Person-to-Person model of lending uses the Web to disrupt the financial services industry by directly linking people and groups who have cash to invest with people and even small businesses who want to borrow money,” says Sean Emery, co-founder and CEO of RainFin. “Consumers are able, as a result, to lend and borrow money at more competitive interest rates than they could get from the banks and without the excessive charges and fees.”
The rise of peer-to-peer lending
“We started to see the rise of the first major social lending marketplaces in Europe and the US around five or six years ago, and since then they have grown from tiny operations into a major force in the global financial services industry. Gartner predicts that Peer-to-Peer lending will account for 10% of all outstanding consumer personal loans by end 2013,” says Emery.
In the US, Peer-to-Peer loans have eclipsed more than $1 billion since 2006 and social loan volumes calculated by the two largest players in the US are around $50 million a month and growing, according to a report by TechCrunch. In the last 30 days, these two lending marketplaces issued 5 600 new loans totalling nearly $64 million with a borrower average interest rate of 15,81%.
Institutional investors are now pouring money into platforms like Lending Club and Prosper. With banking execs such as John Mack, former CEO of Morgan Stanley, joining social lending platform Lending Club, the industry is rapidly gaining credibility in North America. As Mack puts it: “When you think about what a bank does for customers, it takes deposits and makes personal loans. You don’t need to go to a bank to do that.”
A viable alternative
According to Emery, in the UK, the likes of the Bank of England and deputy Prime Minister, Nick Clegg, are talking about Peer-to-Peer lenders as a viable alternative to high street banks in a world where credit is tight and expensive. “Small Peer-to-Peer lenders like Zopa and Funding Circle could in time replace high street banks,” Clegg said in an address to the UK parliament. Around the world, social lending is on the rise, and it can be expected to be big in South Africa, too.
So, what has caused social lending’s worldwide rise? The global economic crisis is certainly one factor. Trust is one of the biggest assets any bank owns and faith in the banking sector has been shaken to its roots by financial turmoil. Against this backdrop, people around the world are questioning why they should not take back a bit of the power they have traditionally given to the banks.
Another reason people are looking to social lending is that they are becoming more and more comfortable with social networks and crowd sourcing. From group buying to open-source software to social sharing of news and information, we count on the crowd for a range of needs. Why not social lending, provided it’s transparent and well-managed?
“Social lending is ultimately about people power,” says Emery. “Consumers are beginning to understand that there is something fundamentally flawed in a model where banks loan money out at prime plus two or three, take cash deposits on interest rates below prime, and essentially pocket the difference, in addition to a range of charges and fees.”
If the global growth numbers are any indicator, social lending is set to explode in South Africa, too. “If it does, expect to see some of the most exciting changes we have seen in the local banking sector for years as banks start to rethink their traditional approaches to cash loans.”
Obama Calls On The World To Be Madiba’s Legacy
Welcoming assembled guests to the lecture, Nelson Mandela Foundation Chief Executive Sello Hatang said, “It’s a very exciting moment for us.”
Former US President Barack Obama delivered the 16th Nelson Mandela Annual Lecture, in partnership with the Motsepe Foundation, in Johannesburg on Tuesday 17 July.
To honour the centennial of Madiba’s birth, the lecture’s theme was “Renewing the Mandela Legacy and Promoting Active Citizenship in a Changing World”. It focused on creating conditions for bridging divides, working across ideological lines, and resisting oppression and inequality.
Welcoming assembled guests to the lecture, Nelson Mandela Foundation Chief Executive Sello Hatang said, “It’s a very exciting moment for us.”
The 15 000-strong crowd was addressed by programme director Busi Mkhumbuzi, Foundation Chairperson Professor Njabulo Ndebele, Motsepe Foundation founder and CEO Dr Patrice Motsepe, activist and Madiba’s widow, Ms Graça Machel, and President Cyril Ramaphosa before Obama spoke.
Ndebele said the world had welcomed Obama’s election to the US Presidency in 2008 and that he had inspired universal belief in human unity.
Motsepe, addressing the crowd, said, “The presence of each and every one here is living proof that the legacy and spirit of Nelson Mandela is alive.”
Machel, Mandela’s widow, said Madiba’s centenary was an opportunity to celebrate him “in all his incredible uniqueness”, and also to celebrate him as a representative of a broader collective leadership that had led South Africa and South Africans to freedom.
Machel called on young people to take inspiration from Mandela’s life so that they create a world in which all live in a way that respects and enhances the freedom of others.
Ramaphosa said the Nelson Mandela Annual Lecture, from the very beginning, had been “global in its ambition, and broad and inclusive in its outreach”.
Ramaphosa said that his “Thuma Mina” (send me) message was “none other than Mandela’s message” of personal service: “Madiba … is sending all of us to deal with corruption, and to root it out of South African soil.”
Obama said: “Madiba’s light shone so brightly … that in the late seventies he could inspire a young college student on the other side of the world to re-examine my own priorities – to reconsider the small role that I might play in bending the arc towards justice.
“And now an entire generation has now grown up in a world that by most measures has gotten steadily freer, healthier, wealthier, less violent and more tolerant during the course of their lifetimes. It should make us hopeful.
“Let me tell you what I believe. I believe in Nelson Mandela’s vision, I believe in a vision shared by Gandhi and King. I believe in justice and in the premise that all of us are created equal.”
In his speech Obama tracked the enormous social and democratic progress the world has made in the 100 years between Mandela’s 1918 birth and 2018.
Obama went on to outline how the world has changed from one just emerging from a devastating war and in which most of what is now the developing world was under colonial rule. Women, across the world, were seen as subordinate to men, some races were seen – almost universally – as naturally subordinate and inferior to others, and business saw nothing wrong in seeking to exploit workers, of any race or creed.
Since then colonialism had come to an end and the world had, in general, embraced a new vision for humanity, based on the principles of democracy, the rule of law, civil rights and the inherent dignity of every single individual, Obama said.
This kind of progress was the kind of progress to which Mandela had dedicated his life, Obama said.
“Now an entire generation has grown up a world that has become freer, healthier, wealthier and more tolerant, in the course of their lifetime. That should make us hopeful.”
But, Obama cautioned, now the world stood on the brink of letting go of all this progress.
Some people, world-over, saw the politics of fear and resentment as preferable to the “messiness of democracy”, Obama said.
The former US President said, however, that he still believed in the vision of Nelson Mandela.
“I believe we have no choice but to move forward,” Obama said. “I believe those of us who believe in democracy and human rights have a better story to tell.”
Obama called for the empowerment of young people, who would lead us into the future.
What NPOs Wish Corporates Knew Before Mandela Day
Joanne van der Walt, Global Director: Sage Foundation Promotions provides a roundup of the best advice to corporates from NPOs.
“It was 2pm on Mandela Day at the after-care centre. The children were getting ready to go home when suddenly, 80 volunteers from a large local bank arrived, unannounced. We didn’t know who they were, but they wanted to use their 67 minutes with to volunteer with us. We appreciated the effort, but we had to turn them away, partly because the children were overwhelmed by the many unfamiliar faces, but mostly because we had no time to prepare the volunteers or the children.”
I’ve heard variations of this story from most of the NPOs we work with at Sage Foundation. The common thread is that, while highly appreciated, NPOs feel that Mandela Day activities could have a much bigger impact if they were better planned.
Planning to fail
In a recent poll of over 200 NPOs, we asked them what their biggest challenge was when it came to working with corporates on Mandela Day: 73% cited a lack of planning and failure to include them in the decision-making for the day.
Related: 5 Inspiring Quotes From Madiba
Their second-biggest challenge, cited by 24% of NPOs, was that too many volunteers show up. So, not only do NPOs not know what to expect, but it can feel like an onslaught, despite the good intentions.
When asked what they enjoyed most about Mandela Day, 50% of NPOs said exposure and 34% said engagement with the volunteers.
Yet, because of the planning oversight, Mandela Day tends to be a rushed affair, leaving little time to build relationships or raise awareness about the NPOs’ work, which is what CSR is all about.
Advice from NPOs
So, we asked NPOs how we can do Mandela Day better and what they wished corporates knew about their needs – 36% of NPOs felt that a little education could go a long way.
Here’s a roundup of their best advice:
‘Include us in the planning’. Meet with your chosen NPO well in advance (weeks, even months before) to discuss their needs and plan the day. Mandela Day can be disruptive, and NPOs, especially those caring for children and the sick and elderly, need time to plan and allocate their own resources.
‘Help us get exposure’. Exposure is massive for NPOs and is often the biggest benefit of Mandela Day because it can attract new donors and support. Yet, often, it’s the corporates that get all the publicity. When charity initiatives are rushed or planned at the last minute, there’s no time to create awareness on social media, which often gets more corporates interested in what they do.
‘Treat us how you would a client or business partner’. Don’t cancel Mandela Day activities at the last minute, show up unannounced or not pitch at all. You’re their guest and they feel a lot of pressure to make Mandela Day a good experience for you, too. This is especially hard for smaller NPOs, so please respect their time and space. And please clean up before you leave.
‘Engage with us’. 58% of NPOs say the company of the volunteers is their favourite part about Mandela Day. Take photos but remember to put the phones away and interact with them. This way, you’ll get a better understanding of what they do and what they need.
This ‘Helper’s High’ goes both ways. One Harvard study found that people who volunteer are 42% happier than those who don’t. Another study found that volunteers were less likely to develop high blood pressure than non-volunteer, reporting greater increases in psychological wellbeing and physical activity.
‘Slow down’. Corporates squeeze a lot into Mandela Day and, while NPOs love every minute, it often feels rushed and overwhelming. NPOs love demonstrating what they do and the difference they make but there’s often no time on the day to demonstrate this. Also, 67 minutes or even one day once a year is not enough to learn about their needs and make a significant impact but it’s a good starting point, as long as you remember to do it.
‘Come back soon’. 45% of NPOs said they never hear from the corporates again after Mandela Day. To get the most out of their CSR initiatives and to make measurable, long-term impact, corporates should form partnerships with their chosen NPOs and provide support throughout the year.
South African organisations spent over R9 billion on corporate social investment in the 2016/17 financial year – a massive increase from the R1.5 billion spent 20 years ago.
For those that haven’t had a chance to properly plan their activities for Mandela Day this year, NPOs reminded us that financial support is often better than a frenzied one-day event that leaves a big mess and has no real impact. One NPO had to hire a contractor after Mandela Day to repaint a wall that well-meaning volunteers had left in a worse state than before.
Before doing anything, consider Mandela Day from the NPO’s perspective: ask for permission, give them what they need, and respect their time and space.
10 African Innovators Selected For Global Accelerator Startupbootcamp Afritech
Startupbootcamp AfriTech empowers the top innovative African tech startups, linking them to the fastest-moving corporates on the continent.
Startupbootcamp (SBC) AfriTech today announced the Top 10 African Innovators selected to participate in the globally renowned, multi-corporate backed accelerator programme for 2018.
Post an intensive 3-month global scouting tour, across 15 countries, and inclusive of 19 FastTrack events and 220 face-to-face startup engagements, the SBC AfriTech team received 1,004 applications from 73 countries in total, attracting double the applications from its inaugural launch in 2017.
The applications were shortlisted to the top 22 startup teams that were flown down to pitch their businesses over 2-days to some of the most progressive leaders in the innovation space in Africa, including corporate sponsors, mentors and investors.
The SBC AfriTech programme (previously SBC Africa) ended on a record high in 2017 with 32 corporate agreements in pilots and proof-of-concepts signed by close of the accelerator.
“Our inaugural year was big, it was bold,” comments Zachariah George, co-founder and Chief Investment Officer of SBC AfriTech, “Our phenomenal success of last year has made us the only truly global accelerator for tech ventures in partnership with dynamic corporates on the African continent – we are accelerating the next wave of innovation in Africa.”
The top 10 African Innovators selected are:
- Akiba Digital, South Africa: A financial savings platform and personal savings coach that leverages A.I., machine learning and gamification to democratize wealth in Africa.
- Bankly Technologies, Nigeria: A goal-based savings product that digitizes cash and enables in-country, peer-to-peer transfer services through the use of vouchers available nationwide.
- Brandbook Analytics, South Africa: A mobile application providing users free gift-card coupons for completed purchases with the ability to harvest vast amounts of consumer data and improved forecasting and analytics.
- CredPal, Nigeria: An innovative solution using deep data that provides individuals with instant access to credit at the point of checkout for various online and offline merchants.
- Digitech Group, Ivory Coast: Provides incumbent insurance companies an omni-channel and cloud-based digital platform to sell insurance products through mobile and web.
- Inclusive Financial Technologies, Ghana: Inclusive FT’s API helps digital financial services reach the most remote customers across Africa by enabling them to onboard, verify and monitor them via digital channels.
- Kudimoney Bank, Nigeria: A no-charge, full-service, online-only bank making banking services more affordable and more accessible by offering an interest-earning spending account with zero charges, a savings account with above-average interest rates and access to low interest instant loans.
- Lüla, South Africa: A mobility-as-a-service platform that connects stakeholders to improve mobility by providing transport that is convenient, accessible and safe and enabling operators, cities and passengers to have easy access and understanding of transport.
- MPost, Kenya: A patented solution providing legally recognised physical addresses for the 95% of the African population that do not have a postal address.
- Prospa, South Africa: A micro-savings solution for low-income earning South Africans, allowing users to purchase savings vouchers at traders that entitle the user to a set amount of savings which are deposited into a mobi-savings account.
The 10 selected tech startups have a month to ready themselves for the 3-month accelerator that will kick off on August 13th in Cape Town and culminate with the Demo Day on November 8th when they will pitch to the world.
To the Top 10, Philip Kiracofe says: “You are here because your solution is market-ready and the sponsors want to work with you starting from today. The next 3 months are going to be absolutely exhilarating. We are going to be here side-by-side, shoulder-to-shoulder, pushing you, cajoling you, encouraging you, nurturing you, mentoring you and helping you achieve 12 – 18 months’ worth of growth in a 3-month span. On Demo Day you’re not going to believe that just 3 months ago you were standing where you are today. Congratulations and good luck.”
SBC AfriTech is anchored and endorsed by heavyweight corporate sponsors RCS, BNP Paribas Personal Finance, Old Mutual, Nedbank and PwC. The programme also has local service partners Brevity Law, Cloudworx, Inner City Ideas Cartel, and The Loudhailer and is globally supported by Google Cloud, Cisco and Amazon Web Services.
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