Fintech
Fintech firm UsPlus unlocks growth opportunities for SMEs in South Africa
As a farmer, how do you prepare your fields for the next harvest when the current crop hasn’t been sold yet? And as a filmmaker, how do you shoot your next film when the proceeds from your previous film are yet to come in? In South Africa, this is where entrepreneurs can turn to UsPlus which provides SMEs with working capital. This fintech company is part of our Financial Inclusion portfolio.
Small and medium-sized businesses (SMBs) are often off-limits to traditional banks, UsPlus’ Ryan Cameron tells us in a video call: “Lending to these businesses is often perceived as a lot of work with little potential return. That’s why banks prefer to work with larger businesses.” For entrepreneurs who lose access to financial services as a result, next-generation technology offers an alternative.
How exactly does it work? Ryan uses the example of a vegetable grower offering his crop to a distributor. As long as the distributor hasn’t paid the invoice, you as a grower need to have enough funds to cover your expenses. If you’re a customer of UsPlus, they’ll pay your invoice immediately and then start collecting the amount from the distributor. For that service, you pay UsPlus a percentage of the invoice amount. As a result, you don’t have to worry about paying your employees and can start preparing for the new harvest.
Responsible financial technology drives financial inclusion in emerging economies
Without loan
This way of working is called “discounting”. Since its launch in 2015, UsPlus has already advanced USD 188 million in this way. The benefits for SMEs are many: easy and quick access to working capital, no need to chase unpaid invoices and a better cash flow to pay suppliers and grow their business, all without a loan or fixed monthly costs.
This type of service shouldn’t be necessary, says Florian Bankeman, fund manager at Triodos Investment Management. “But inequality is high in South Africa, starting a business and keeping it afloat is not easy. Especially when you know that it can sometimes take a year, especially for larger companies, to pay their invoices. That’s devastating for start-ups.” During a business visit in February last year, he met a furniture manufacturer with several dozen employees. “They were thrilled that they had just secured a big customer. That was possible because, thanks to UsPlus, they didn’t run the risk of having to advance money for 12 months themselves.”
Entrepreneur Thabiso, who runs a logistics company, sums it up: “There is a big difference between selling something and getting paid for it. As a business, you don’t get anywhere without cash flow. Thanks to UsPlus, we now have a profit margin that supports many families.”
“By working with us, companies gain stability, can grow and hire more people.”
Ryan Cameron, CEO UsPlus
Real people
“Our clients include South African farmers, manufacturing companies, transport companies,” Ryan says. “We work with real people and help them with the challenges they face. These are all valuable businesses for our country. By working with us, they get stability, they can grow and hire more people.”
Ryan cites the example of the film industry, where production companies are paid by film distributors when their film appears on the big or small screen. As a result, the revenue comes gradually, while all the costs have already been incurred by that point. Making ends meet is a daily challenge. “One of the production companies we work with was about to throw in the towel. Today, their films are on Netflix, Amazon and Showmax, among others.”
Florian added: “This way, South African filmmakers and their way of filmmaking are given a platform. This is also having a positive impact.”
“Our investment means UsPlus can broaden and diversify its funding base”
Florian Bankeman, manager of the Triodos Investment Management fund
Exclusion criteria
UsPlus has clients in over 40 industries, including healthcare, sustainable agriculture and recycling. Companies with a clear added value to society. There are also industries and activities that they explicitly exclude due to their negative environmental or social impact, such as mining, tobacco or gambling. Their exclusion criteria are based on International Finance Corporation Exclusion List.
“UsPlus has a proven track record of performance and resilience over the past eight years. The investment from Triodos Fair Share Fund and Triodos Microfinance Fund means that this innovative fintech can broaden and diversify its funding base, further strengthening South Africa’s underserved SME sector,” Florian concludes.
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