Page 17 - demo Golden pond document

A2pay investment proposal 16

The pilot in summary:

• R1, 275,000 has been dispensed to 30 merchants in bundles ranging from R16,000 to R100,000

with 6 month repayment periods to 30 recipients.
o 7 of the initial 30 have settled their loan early and secured a second disbursement. 18
merchants have requested to shorten the period so as to secure a second loan.
o Retail disciplines have improved significantly, use of the business tool and financial

literacy around shop performance is up 100%.
o On average revenues grew from R35,000 to R95,000 per site per month in 90 days.
o The daily repayment model has assisted merchants to gain confidence in their ability to

honour a loan as well as plan effectively for the next one.
o No bad debts were recorded.
• Some spaza shops are evidencing 10 employees and the market however has almost unlimited

job creation potential and every serious Spaza has the ability to employ between 2-7 people. The
Jobs Fund Project coupled with a focused loans business based on performance could radically
transform the industry.

Mitigating Bad Debt Risk:

We believe bad debt will be minimised because of the following:
1. Personal Engagement
a. A2Pay/JF have been integral to the success and growth of the merchants business through
the technology and the coaching. The programme has a fundamentally solid relationship
with the business owner.
b. Prior to applying for the loan the merchant will have been on a 6 month program where
behavioural indicators will have been met, such as actioning the FMCG disciplines, attending
the coaching, keeping reports, maintaining and growing revenues.
c. This is fundamentally a personal process enabled by the recommendation of the coach and
their team leader. The coach is remunerated for successful loan repayments.
2. Wallet Transactions and Daily repayments
a. 25% of all amounts are paid into the wallet (almost like a deposit) and 75% into the bank
account. We therefore protect 25% of the loan.
b. Daily repayments also mitigate risk massive, reducing the risk of default at the end of the
month because the increments are small daily amounts rather than one larger one at the end
of the month.
c. A social benefit is that a merchant’s financial confidence increases dramatically as they
realise they can repay the loan. 80% of the KwaZulu Natal pilot repaid the loan in less than
their initial 6 months and successfully applied for a second loan.
3. National Credit regulator and financial inclusion.
a. A2Pay utilises NCR accredited software to credit check applicants.
b. The merchants business qualifies for the loan and not the individual, even though the loan is
in the name of the individual– this is the massive shift that A2Pay strive for in the coaching.
c. Once the successful loan applicate is awarded the loan, one per 100 applicants are managed
by 1 account manager in the admin department.

See Testimonial Video on loan pilot at the end of this document.