New free banking platform to connect millions of unbanked South Africans to digital economy
A new cooperative fintech platform launched at the Johannesburg Stock Exchange (JSE), CoegaX, aims to connect all South Africans to the digital economy by providing free payment services and interest-free production loans.
CoegaX, the Collaborative Trading Platform was built by the FORUS Foundation, who aim to use technology to alleviate poverty and build a generative economy. The platform combines blockchain, cloud computing and social networks to create a free, secure, collaborative and self-sustaining platform where people are set up for economic success.
“We took the technology tools of the Fourth Industrial Revolution and applied them to the problem of economic inclusion,” says Sonny Fisher, founder of FORUS. “11 million people in South Africa are unbanked today. However, despite dozens of mobile payment solutions, South Africa still has not achieved financial inclusion for the majority of the poor.”
This, Fisher believes, is because current financial services fail to provide three things: Access to capital, markets and education.
“Many small businesses today are destroyed by micro-lenders, who issue small loans with impossibly high interest rates,” he explains. “Additionally, it’s unfair to take people with limited business experience, give them money and expect them to be successful without support.”
According to the World Bank, South Africans are among the top borrowers in the world and battling high levels of personal debt. Nearly half of the country’s 25 million active credit consumers are behind on their payments, with consumer debt totaling an estimated R1.7 trillion.
CoegaX uses electronic legal tender, which is free from the constraints of the national banking system to reach the most remote users and removes the need for any intermediary bank. Additionally, revenue is generated from permissioned advertising, which is delivered to the customer in the notification of payment while people are transacting, the systems allows click through to purchase, and advertising revenue is generated in the event of a sales.
CoegaX provides access to mobile wallets and payment cards where users can transact face to face, virtually or through a digital marketplace. This digital marketplace aims to create an entire cashless ecosystem where businesses, customers, farmers, taxi drivers and more can digitally transact with each other. CoegaX cards will be able to be used nationally through a partnership with Ecentric Payment Systems, which supports over 90,000 retail lanes throughout Africa including Shoprite, Pep and Foschini Group.
CoegaX enables communities to onboard themselves onto a secure transactional platform and build assets together using the District Cooperative model and the current cooperative legislation.
The most unique features of the FORUS Global Digital Exchange, however, is its ability to offer interest-free loans and that the platform invests in the business as well as the skills required to be productive which mitigates risk of failure.
Each investor and early member that signs up to CoegaX receives MahalaX equity token to the value of R100, effectively becoming a shareholder of the FORUS platform.
FORUS have designed a Bond instrument to raise capital to invest in production. All of this investment will be done on a profit-sharing contract on the CoegaX platform, which enables real-time revenue share to be collected at transaction level. Other instruments include using the customer share of advertising revenue to reduce the cost of student debt. Users of CoegaX are also provided with integrated accounting services and on-site or virtual training on how to service debt. Using artificial intelligence. The platform monitors user banking performance and intervene where necessary.
CoegaX aims to connect 100 million people globally in the next few months. The route to achieving this number is to onboard the cooperative sector in South Africa and in other countries.
FORUS is currently recruiting what it calls ‘Mavens’, a diverse team of multi-skilled experts from various industries to fund the initial investment and guide future ones, bringing new projects and audiences onto the platform. There are currently between 70 and 100 Mavens in FORUS’s network, which is set to expand to 2,500 people globally.
Speaking at the launch, Annie Sugrue, a Maven from the small business and cooperatives industry, says the platform is exactly what South Africa needs.
“Without this platform, you are never really going to succeed,” she says. “Cooperatives are supposed to cooperate. But, previously, there has been no way for cooperatives to engage with each other. They have also been mostly funded by grant funding, which comes with a lot of restrictions. Grants usually end after three years, just as people are starting to understand their markets and develop their skills. Having a platform that enables exchange and working capital makes a big difference and supports the scale cooperatives are capable of.”
Gwynne Foster and Nomvula Phangisa are two other FORUS Mavens, who work in Traceability and Student Accommodation. Foster sees significant potential for the platform to help local farmers access profitable markets and supply chains, while also improving their knowledge around agriculture requirements and regulation.
Across all industries, Fisher’s biggest hope for the future is to see CoegaX usher in a payment revolution.
“I want South Africans to turn this into an economic center,” he says. “M-PESA in Kenya created an entire ecosystem and industry around it. We have an opportunity to be world leaders in building a cashless society, where it’s finally possible to bring everyone into the digital economy.”