How does Africa, and more specifically South Africa, address the massive problem of the underbanked and the unbanked?

Okay we’ll admit this is a bit of a trick question because the answer might be to not rely on banks at all.

Throughout the continent we’ve seen a number of financial solutions that don’t rely on banks to bring people into the financial system.

This is the differentiation we feel is key. Banking is all good and well but there are many instances where the traditional business practices of a bank excluded people, especially here in South Africa.

So perhaps we should look at something else, something that lets folks build a credit profile while transacting and helping small businesses along the way.

As it happens, this month Tafari Capital, a Black-owned fintech startup has announced the Tafari App and it is jaw-dropping.

While the app is in the final stages of release we thought we’d chat to executive chairman of Tafari Capital, Dr Thabo Lehlokoe, about what the app will be capable of, how it will address financial exclusion and more.

It’s best not to think of Tafari App (which we’re going to refer to as Tafari for brevity’s sake) as a banking app but an entire financial eco-system comprised of online shopping, credit and banking all in one.

Through Tafari you would be able to open a fully functional Cheque, Saving or Sharia-compliant account for free. The only stipulation is that the account has a positive balance as their is no overdraft facility available.

But we’re getting ahead of ourselves here because Tafari’s financial functionality is built on so many more than a bank account.

Tafari will let users create an online store through which they are able to sell goods or services. As Tafari has a bank account component, users are able to receive payments from shoppers.

There is also a way that Tafari can facilitate deliveries without having to involve the courier in payment.

“Our solution has an escrow facility built into it. As a buyer I can pay for goods or a service via escrow and once I have received the  goods and confirmed they are correct the payment will be made to the seller,” explains Lehlokoe.

Users are also able to make purchases for things such as airtime, electricity and pay their DStv subscription.

Credit where it’s due

What really caught our eye with Tafari was the so-called Credit Mall.

Here, users would be able to look for loans from institutions registered with the National Credit Regulator. Tafari Capital itself is in the process of becoming an accredited financial services provider.

What interests us is that, as a person uses Tafari, they begin to build up a credit profile.

Through this profile, Lehlokoe tells us Tafari will be able to pre-approve users for credit. But the important thing here is that through using Tafari, it’s algorithms are able to see how you spend money, and whether you would be able to afford credit.

Keep in mind that this is without the need for three months of bank statements, a physical address and other requirements needed for traditional credit solutions.

“We are using artificial intelligence to monitor user behaviour, how they spend their money and whether they have money. People have money and just because they don’t have a salary slip shouldn’t mean they can’t be included in the financial system,” Lehlokoe tells Hypertext.

Deja new?

Tafari is not the first alternative to traditional bank accounts we’ve seen.

While several players have come and gone, many are reminded of Vodacom’s closure of M-Pesa locally.

Since then we’ve seen some solutions come and go but Tafari’s chairman says that it differs from solutions like M-Pesa in one key way.

“The problem with mobile money apps is that they are very closed loop. With Tafari Pay you can integrate into other systems, even accepting credit card payments. Our solution is built on an API-first architecture so we can have many micro-services running for other services to integrate into our platform,” explains Lehlokoe.

This means that being able to make payments at a major retailer could be as simple as the retailer adding Tafari’s API into its platforms.

That will be the key to Tafari’s success. Allowing folks to use which ever payment method they have available is better than forcing folks to use one payment method for a specific platform.

The Tafari App is currently in a beta-testing phase with a view to launching in South Africa in August.

For those who would like to get alerts for when the Tafari App is widely available you can pre-register over on Tafari Capital’s website.

Tafari Capital also hopes to expand this solution to other African markets in the future.

We’re going to be keeping an eye on Tafari in the months to come. This is a rather exciting solution and we’re keen to see how it performs in the wild.

[Image – CC 0 Pixabay]