South Africans Flipping the Script on Exploitation: How a Homegrown Fintech Startup is Empowering Financial Freedom
South Africans are being exploited. Wages for semi- and un-skilled work are low, meaning some workers take home as little as R1500 a month. To cover R5000 worth of transport, food, housing, childcare and other costs, these workers (most of whom don’t qualify for a bank loan) turn to loan sharks. They are forced to pay 50% interest monthly, if not more (far higher than legal thresholds). This leads to severe debt spirals. But now, South Africans are leveraging a homegrown fintech solution – earned wage access (EWA), a financial service allowing employees to access their earned wages before payday.
While EWA began in the USA in the 2010s, it was introduced to South African in 2019 by fintech startup Paymenow. The co-founders Deon Nobrega, his university roommate Bryan Habana (already famous for his impact on South Africa’s sports scene), as well as Gerry Potgieter and Willem van Zyl, recognised EWA’s potential to transform the South African financial landscape. The two redesigned the concept for the South Africa context, accounting for the cash-in-hand environment and stokvels. This included adding fee-free vouchers for necessity products to their data free platform, which can be shared with family or friends. Paymenow has also integrated gamified financial education to address South Africa’s extremely low financial literacy levels.
“We’re not just providing a service; we’re facilitating a mindset shift,” says Deon Nobrega. “South Africans are under real pressure. Our version of EWA is about using African solutions to address uniquely African challenges. It’s about empowering people to help themselves. With EWA, workers don’t need to beg HR for an advance, or borrow from friends or family. They can meet their financial responsibilities with their own money. And while we can’t change the low wages, we can assist our users long-term by providing free access to quality financial education.”
And the great news is, it’s working. Paymenow’s latest impact report showed that 92% of users had no alternative to borrowing money before EWA. But after getting access to Paymenow, 82% of users report lower debt levels. Tellingly, 7 in 10 users have greater financial independence, and two-thirds report reduced financial stress. This has resulted in an incredible 94% of users reporting improved quality of life.
And now it’s not just South Africans who are benefitting. Several African multinational corporations have recognised this potential. Companies like Hungry Lion, Pepkor and Massmart Africa have already partnered with EWA providers like Paymenow to bring the service to their staff. Investors have also recognised the massive market and humanitarian potential of EWA, with the likes of the Bill and Melinda Gates Foundation investing $500,000 into Nigerian EWA startup Pade.
South Africa’s Paymenow has also expanded into several other African countries, including Namibia and Zambia, bringing EWA to over 150 corporate clients and 500,000 active users. In many cases, a Paymenow launch session was the first time someone had even heard of an alternative to debt and borrowing, let alone budgeting and financial planning. And with big plans to expand even further across sub-Saharan Africa, Paymenow and other EWA providers are becoming the catalysts for financial empowerment across the continent.
Some people see Africa as exploited, populated by victims who cannot help themselves. But South Africans are leading the way in flipping this script. With the rise of homegrown fintech solutions like Paymenow, workers are transitioning from debt-burdened to financially-empowered and reshaping their economic futures. As this technology continues to spread across Africa, it carries with it the promise of financial freedom.