Mutual bank eyes niche markets
Nthabeleng Likotsi understands her strengths and her weaknesses. After failing her chartered tax adviser exam three times, she knew she was not meant to be an accountant. But she never dreamed that one day she would own a bank.
This early setback did not dampen her love for accounting, but rather pushed her to heed a calling to be an entrepreneur and work with people.
Her intention in initiating the Young Women in Business Network (YWBN) with 35 other young people in 2009 was to support black entrepreneurs. Now she is about disrupt South Africa’s banking industry.
Last Friday, 33-year-old Likotsi submitted a licence application to the Reserve Bank in Pretoria for the YWBN to become a mutual bank.
Not one to arrive unnoticed, she led a financial freedom march from the Union Buildings to the central bank, with banners reading: “If not us, who?” and “If not now, when?” This was to highlight the lack of access for women in the financial sector.
“We have political freedom in this country and now we need financial freedom,” Likotsi told the Mail & Guardian at YWBN’s offices in Edenvale, from where it funds black female entrepreneurs.
The network’s Reserve Bank application is aimed at growing its reach.
Likotsi told the M&G that she and her business partners needed R10‑million to R15‑million to put an application together. The amount they managed to raise did not come close to what was needed, but that did not stop her.
“Because I am good with people and good at selling the vision, it took me moving from one big audit firm to another [to secure funding] and approaching like-minded black professionals, who bought into the vision. That is how we got the funds.”
Her graceful yet bubbly demeanour may fool people into thinking she can be easily dissuaded. Not so. “I am stubborn and I do not take no for an answer,” she said.
Likotsi means business. “I want to be remembered as that girl who brought black people together to create wealth and a lasting legacy.”
The YWBN is registered as a co-operative financial institution with the Co-operative Banks Development Agency in Pretoria. The agency is affiliated to the national treasury and was established to regulate, promote and develop co-operative banking, including deposit-taking and lending.
“South Africans are ready for change and we need to do right by them,” said Likotsi, who is positioning the YWBN to be South Africa’s first 60% female black-owned bank.
She said her fascination with co-operative banking started when she attended a “women in business” conference in Switzerland. “I learned about co-operatives from an official who used to work for the department of small business. I thought: ‘That is stokvel, mos,’ and I came back home and did my research.”
To her surprise, about R44-billion (at that time) sat with stokvels alone — and street vendors in markets between Johannesburg, Tshwane and Sedibeng made R40-billion a year, said Likotsi, quoting data from a survey by market research firm African Response. She thought: “That’s where the money is and black people just don’t know it yet.”
After she and her business partners realised that the buying power lay with taxi drivers, hawkers and stokvels, they chose them as the niche market that the YWBN mutual bank would serve. As a result, the YWBN is targeting these groups to save with its envisaged mutual bank. A client can be a shareholder by paying an annual membership fee of R550, making a R10 000 capital contribution and saving R1 100 for a period of five years, said Likotsi.
“We say five years because it takes time to put processes and governance in place, and although the R10 000 capital contribution is high, it will enable us to get where we want to get [opening a mutual bank].”
She said the co-operative bank had a black investor, but cannot name them until the deal ias sealed by the Reserve Bank. Currently, the bank has more than R40-million in capital and 550 shareholders, with hopes of reaching 1 500.
Apart from being shareholders, members will also have access to credit once they join. Currently, the YWBN cannot issue loans to the public until it is registered under the National Credit Regulator and receives its licence from the Reserve Bank. Should this be granted, the bank will offer an app in its initial stages and will launch branches later. Once it receives its licence, the YWBN will be the fourth mutual bank in South Africa, joining GBS, Finbond and the recently launched Bank Zero, after the demise of VBS Mutual Bank.
There are a few differences between a co-operative bank and a mutual bank. For instance, a co-operative bank is controlled by at least 200 members and needs deposits of R1-million, whereas a mutual bank is controlled by seven members and must have at least R10-million in share capital. In a co-operative bank, the founding members can be any person, company or trust. In a mutual bank, the founding members and depositors are shareholders and hold voting rights.
The envisaged YWBN bank will offer financial support and mentoring to entrepreneurs. “There is no bank that understands black entrepreneurs in this country better than us, because we understand the challenges,” said Likotsi. “For us to decrease unemployment we need a bank that supports entrepreneurs, because they create jobs.”
She said the bank had a better chance of succeeding than failing because the government was looking for a black-owned bank to work — and there wasn’t any such bank currently. She cited as an example the fact that the government wanted to work with a black-owned bank in its Gauteng township revitalisation programme, as well as overseeing tenders. “We will be the ones playing in that space.”
Likotsi attributes the growth of the YWBN to a group effort. “I may be the glue and I may have founded this idea, but this is not about me. It’s about a group of 16 young black professionals who put an application together to set up a bank.
“I believe that black people and black women can work together. Our parents did it and, even though our generation seems to have lost [that unity], we can do it.”
Thulebona Mhlanga is an Adamela Trust financial reporter at the M&G