Affordable livestock insurance, a village mud hut insurance policy and collective lending and savings products for the villages of Mnquma in the Eastern Cape are some of the innovative products that have come out of a partnership between Wiphold and the Old Mutual group of companies.
It is an example of how broad-based black economic partnership can be implemented successfully.
Wiphold, an investment and operating company owned and managed by black women, put together the concept of the rural initiative and assisted the Old Mutual companies, including Old Mutual, Mutual & Federal and Nedbank, to provide financial services tailor-made for the community’s needs. Although Wiphold has a stake in Old Mutual at an ownership level, it also has set targets for helping the group to meet its Financial Sector Charter targets.
Debra Marsden of Wiphold says the BEE deal with Old Mutual stipulated the role Wiphold had to play in that organisation. It was not simply about sitting on a board and using its contacts to bring in big clients, it was about bringing real economic empowerment to disenfranchised communities.
“There are vigorous performance measures and we need to generate benefits for individual business units,” says Marsden, who adds that Wiphold receives performance fees for delivery, of which 75% goes to repaying the debt on the BEE transaction.
Marsden says a partnership has to be a two-way relationship. The BEE partner can deliver only if the company gives it access to the business and supports its endeavours. In the case of the Old Mutual group Marsden says Wiphold is genuinely part of the strategy of delivering financial services.
Apart from unusual outside-of-the-box solutions, the offering includes traditional financial services, such as banking facilities and traditional insurance products, such as funeral cover.
These financial solutions came out of a two-year process of engagement with villagers, traditional leaders, councillors and the municipality in the Mnquma area.
“Our product offerings aim to address the reality that many people are sold products by unscrupulous service providers, which take them further into poverty. Our products will be ‘best value for money’, seeking to preserve or enhance income and wealth instead of depleting it,” says Marshall Rapiya, Imbizo convener and MD Old Mutual Mass Market.
Marsden says a bank can go into an area and install an ATM and sign up some Mzansi clients in the name of access, but a lot more can be done. A financial services company can grow a whole new market, which is good for the business and good for the community.
The idea of livestock insurance was a result of spending time understanding the community’s needs. “During our engagements with the community, people indicated that livestock and housing are their wealth,” says Merrick Oeschger, executive general manager, Mutual & Federal. “Our livestock cover is a first in South Africa and is affordable because the premiums are volume-based.”
Nedbank’s new collective lending product offers more favourable terms than unregulated lenders and encourages lending for productive revenue-generating purposes. Dubbed Zakheleni (Build for Yourself), the offering is directed at community economic development and community asset building.
A key element of the economic partnership is investment to ignite the economy and facilitate enterprise development. This includes the Green Revolution — a partnership with the Eastern Cape and Mnquma departments of agriculture to facilitate food security and micro-agriculture, dipping tank restoration and development of micro-enterprises, such as fence-making.
As the community of Mnquma indicated that it preferred to engage its financial services providers on a face-to-face basis, the partnership developed a Greenshop in Centani, which opened in February. This was built by community members, which contributed to job creation, and is “green” in terms of energy saving and its carbon footprint.
In addition to housing the Old Mutual group offices the Greenshop provides a place for the community to meet, for small enterprises to run their business and for other organisations to run their programmes. The community calls it “the jewel of the district”.
“The project offers local government, the private sector, the not-for-profit sector and the community the opportunity to work together to improve the local economy. It aims to enhance competitiveness and thus encourage sustainable growth that is inclusive and echoes the new trends in building social capital and cohesion,” says Mnquma council speaker Mbulelo Ntenjwa.
A building block of the Mnquma model is the provision of financial education. Through the Old Mutual Masisizane Fund the group has embarked on a programme to take financial education to villages. Teaching basic business skills to potential micro-entrepreneurs is part of the strategy to ensure sustainability, which will have a knock-on effect for credit management and the success of the microlending offerings. Since the programme’s inception in November 2007 about 2 500 people have been trained across 20 villages.
Mnquma is one of three sites where this initiative is being rolled out (the others are Acornhoek and Kliptown). Mnquma, however, is the flagship.
“Going forward, the Old Mutual group and Wiphold are committed to ensuring that the existing sites are spectacular successes — for the communities and for the companies,” says Rob Shuter, chief executive of Nedbank Retail. “Based on learning from these sites, we are considering taking the model to other rural communities throughout South Africa.”