Developing and growing African capital

Founded by 23 black professionals and entrepreneurs with varying skills and experience in the private and public sectors

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Founded by 23 black professionals and entrepreneurs with varying skills and experience in the private and public sectors, Tafari Capital strives to provide access to financial inclusion, market access and economic opportunities to underserved communities
Dr Thabo Lehlokoe, the chairman, discusses industry challenges, gaining financial freedom and the organisation’s goals.

Please could you tell us a bit about yourself in terms of your educational and career journey and how long you’ve served as Tafari Capital’s chairman?

I graduated with a BSc (biology and chemistry) from the National University of Lesotho (NUL), commonly known as Roma, in 1986. In 1992, I completed my medical studies, MBBCH, at the University of the Witwatersrand. In the early 2000s, as part of honing my business skills to prepare for life in both the entrepreneurial and corporate worlds, I enrolled and completed an Executive Development Programme (EDP) at the Wits Business School.

I received a couple of awards; the first one, of which I am particularly proud, was the Moshoeshoe Scholar Award for being the best student in both academic and non-academic activities. The second was from the Lesotho Medical Association for being the best student in both biology and chemistry. I was awarded a scholarship by the International Association for Exchange of Students for Technical Experience (IAESTE) and was allocated to Switzerland. I later worked at the Anglo American Research Laboratories as an Analytical Chemist for a short while. Following my medical studies, I worked at George Mukhari Hospital in Garankuwa, Tshwane. I then left for the United Kingdom in mid-1994 to train in ophthalmology as it was difficult to get into that speciality in South Africa. After 18 months, I came back to complete my studies back in SA.

When I was in my final year of Ophthamology Specialist training in 1998, a side project I was working on came to fruition and I had to leave my studies to pursue that project. This was to set up a network of primary health care clinics, which were to use technology to provide access to affordable primary health care. Unfortunately, this very innovative project did not live to see its true potential.

By then, the technology bug had bitten me and I then worked in the area of information security for two years before joining Siemens Business Services as an Account Director to the first ICT Public-Private Partnership (PPP) worth R1.2-billion over 10 years. This was in 2003. Later that year, I was elevated to Head of Public Sector Sales and in 2004, I became Market Development Director.

In 2006, I formed Seemahale Investment Corporation with the late Ambassador, Billy Modise, as the chairman, Dr Klaus Doering, the former Siemens Limited CEO, as the deputy chairman and my brother, Teboho Lehlokoe, as the Non-Executive Director. The other Director was Markus Bucher, a former Director of Holcim Cement.

In 2008, I led a consortium called Seemahale Telecoms to become Motorola’s equity equivalent partner. In 2010, I bought a struggling company called Fibretronic Sales and duly proceeded to turn it around with my wife, Dillo Lehlokoe, who is still the CEO of the company today.

In January 2016, a group of WhatsApp friends coalesced around the idea of forming a 100% black-owned bank and after a few iterations with names, Tafari Capital was born. Initially, we were a group of about 23 investors who put down the money for the establishment of the entity. Since then, we have grown from strength to strength and we now have 70 investors in the company.

The finance game is a bit different in South Africa or, indeed, Africa as a whole. What would you say are your biggest challenges?

The rationale behind the formation of Tafari is economic inclusion through banking of the unbanked and the underbanked. At the heart of this initiative is the creation of African capital through the harvesting of African money. Our entry route into this monopolistic market is through disruptive technology to give ourselves a fighting chance, given the serious barriers to entry, ranging from regulatory to cost. Our digital banking model and approach is informed by the cost of entry and evolving technology that has made access easy and less costly.

We aim to improve the credit score for each African to facilitate their participation in the economy and to take advantage of the following industry dynamics in the financial services sector:

  • Perceptions of high fees limit the usage of banking services—the fee structure of South African banks is up to four times higher than countries such as Germany, Australia and even India. Banks spend three times as much on IT security as non-financial organisations of the same size.
  • There is a general sense of mistrust in banks’ motives—people on low incomes have a deep mistrust of the current financial sector, rooted in fears of exploitation and the past inappropriate marketing and selling of financial products.
  • Fraud concerns—while some people in the low-income bracket do not utilise mobile and Internet banking simply due to a lack of familiarity, the fear of fraud involving ATMs and mobile/Internet banking was cited as the number one reason for preferring to transact in cash. More than 60% of all purchases are being paid for in cash.
  • People value a sense of community with trusted advisors—community-based organisations still provide the flexibility and support structure that is perceived as lacking in the banking industry.
  • Banks require too much paperwork and response times are slow—the financial services industry has created substantial barriers for individuals to access products such as loans. Banks require payslips and bank statements, and approval can take a long time. This is restrictive to people in the low-income segment who often need money on the same day and do not have access to these documents.

A significant amount of business is conducted informally—according to the last survey conducted by Statistics South Africa in 2016, more than 1.5-million people were running small, informal businesses in the country. Banks require proper registration in order to open business banking accounts and offer loans, but registration fees are often prohibitively expensive for small business owners, limiting the use of such services by these businesses.

What are your personal short- and long-term goals for Tafari Capital, and where do you see the organisation in 10 years?

Short-term goals: to launch the platform officially within the South African market.We have completed the first phase, which included the demo of the banking platform that we tested for robustness, and we are happy with its performance. I must indicate that the cost of developing the demo banking platform was funded by individual Africans.

Long-term goals: to have a footprint across the African continent as well as to service the African diaspora and the rest of the emerging markets worldwide.

Tell us a bit more about the company, what you do and who your specific target audience is?

Tafari Capital’s purpose is for African entrepreneurs and businesses who face many challenges in getting their operations off the ground. Key amongst this is access to tailored financial services, including access to capital and access to business advisory tools. Existing capital providers are often quite rigid in their requirements and do not lend themselves to providing the necessary assistance to entrepreneurs and businesses that would allow them to meet such requirements.As a result, these entrepreneurs are not able to get to a point of being fundable. Most interventions by the government and the private sector have failed to recognise the prohibitive costs of existing financial service products for most Africans, be they individual consumers or entrepreneurs. Tafari Capital intends to launch a banking platform that puts this African consumer at the centre of the value proposition and design products that address the customer needs. This journey will start with an agency-banking model that will graduate into a full-service commercial banking model later.

In your opinion, what is the best way to help Africans gain financial freedom and how can we go about achieving this?

Promoting financial freedom and economic inclusion by bridging the digital divide, especially for the lower-income population, community-based organisations still provide the flexibility and support structure that is perceived as lacking in the banking industry.

South Africa does not rank very highly on a global scale in its ability to convert wealth into wellbeing. Financial inclusion and the adoption and sustainability of financial services is generally linked to positive socioeconomic development. The challenge in South Africa and on the rest of the continent is that our bank costs are up to four times higher than countries such as Australia, India and Germany. This is due to archaic legacy technologies that are inflexible and extremely expensive to run.

What makes you better than your competitors within the banking sector?

We are going to offer free personal and business accounts and a digital marketplace to allow for affordable access to markets for our customers—obviously, this is a bold move and is somehow counterintuitive in the current thinking of banking. Anyone who has a smartphone is a potential client of Tafari Capital and if you don’t have one, we will provide you with one at a competitive price. Initially, we are not going to offer credit ourselves but will have credit providers on our digital platform who will offer credit to Tafarians.

However, we will be offering most of the banking services and beyond. Cross-border remittances are going to be cheaper and instant because of our technology. In addition, there’s our vision for digital and financial inclusion. We will use technology to offer services they are currently not able to. 

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