- 3,121 informal retailers recruited and trained across the country
- 3,118 permanent new jobs created
- 72% of beneficiaries attributed their success to the project’s incubation process
The Jobs Fund (JF), a R9 billion fund created by government in 2011 to co-finance public, private and not-for-profit projects for the purposes of job creation, has helped spaza shops embrace digital retail thanks to a R78 million grant, and equal matched funding from A2Pay, for the rollout of specialised vending machines to informal retailers in peri-urban areas of South Africa.
The JF partnered with A2Pay, a South African financial technology company that provides advanced vending solutions to small and medium-sized retailers, to recruit and train 3,121 informal retailers across the country. The three-year project enabled these entrepreneurs to sell a range of virtual products including pre-paid electricity, airtime and lottery tickets while also facilitating money remittances, creating 3,118 new permanent jobs in the process.
“The impact of the A2Pay project was that it not only helped spaza shop owners supplement their incomes, but it also illustrated the benefits of being integrated into the formal financial system by highlighting the convenience of electronic payment and service distribution,” said Najwah Allie-Edries, Head of the National Treasury-based JF. “It also met our primary objective of job creation and we are now looking at ways to scale up the project with our partner.”
Former President Thabo Mbeki said in 2003 that South Africa is characterised by two parallel economies: one which is integrated into the national and international financial system and one which is structurally disconnected, thereby leaving it incapable of self-generated growth and development. The JF has worked since its inception to help address this dilemma by funding projects that get more people into formal employment, enabling them to gain greater access to formal financial products and services.
The A2Pay project supplied both fixed and mobile vending machines, called Biz Boxes, to qualifying retailers in peri-urban areas at a subsidized rate thanks to the JF grant and an equal amount of matched funding from A2Pay. Target merchants were required to have an existing retail business (Spaza, butchery, grocery store etc.) in order to qualify and were trained on how to use the machines to augment their retail services. They were also required to employ at least one worker per machine, although some also received mobile units and were tasked with training and employing an additional employee to handle the mobile business.
This effectively created a micro-franchising technology platform that supplied a full range of products accessible via the vending machines including:
- Cellular services
- Airtime, data, RICA, starter packs, pay phones.
- Financial Services
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- Microloans (short term 1 month and long term 84 months).
- Debt review offered as an additional service.
- Electricity
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- Vending to municipal accounts, prepaid meters and Eskom.
- Insurance Services
- Funeral cover.
- Courier Service
- (UTI).
- Business Services
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- Sold off the Biz Desk/Box/Booth vending solution (scan, print, copy, fax, email).
- Pre-Paid Health Services.
“A major challenge faced by South Africans living in rural and peri-urban areas is that they have limited access to retail services and often have to travel long distances to larger urban centres to purchase basic pre-paid services such as airtime or electricity,” said Allie-Edries. “This project allowed us to address this issue while at the same time creating additional revenue streams for existing entrepreneurs as well as new job opportunities in the communities they serve.”
A2Pay appointed Customer Relationship Managers (CRMs), who each looked after 30 to 40 sites, and used an incentive-based compensation model in which sales generated by their merchants earned them a commission comprising 70% of their total salary package. This helped link their own success to that of their merchants, 72% of whom indicated that their growth and success was due to the incubation services and support provided by A2Pay.
Among the many interesting findings of the project was that more mature female retailers (generally over 40 years old) who were literate and whose children had completed school, were the most likely to succeed. This was attributed, in part, to them having good networks and relationships within their local communities, which assisted sales, although they were also observed to demonstrate a generally stronger work ethic.
“The A2Pay project is a success story because as the spazas expand their product offering through the Point of Sale technology, they see an increase in their turnover and revenue, allowing them to employ more people in order to keep up with the demand,” says Allie-Edries.
