In South Africa, 8.2 million people work in the informal sector, bustling to make a living by making and selling food, buying home goods at a low price and selling them at a profit, or recycling. South Africans juggle multiple, informal side businesses at once and face a tough reality: without access to capital or secure ways to save their money, many resort to using personal savings to grow their businesses, often keep cash at home, and rely on friends, informal lenders, and increasingly high-cost digital loans.
Spoon Money, a purpose-led, women-owned fintech, offers a different savings and credit solution, supporting women-led, township-based informal businesses to transition from just surviving to being stable and sustainable. Providing a combination of savings and affordable working capital loans, Spoon Money serves 200 active savers and 150 borrowers, from street vendors to home-based tailors, hairstylists, and childcare providers. Spoon Money targets the many households and informal businesses not considered by banks because of irregular income and lack of collateral.
Spoon Money clients can save starting with just R100 (5.50 USD) per month—making it accessible for low-income earners. These savings are then pooled and invested with reputable asset managers, allowing clients to access capital markets and earn investment returns that would otherwise be out of reach. Spoon Money also offers affordable working capital loans, generally short term to start (one to six months) with extended terms based on client history. Cash-flow data and business plan analysis are key sources of information for credit assessments of potential clients.
Namhla is one of Spoon Money’s clients. A serial entrepreneur, Namhla sells clothes and perfumes from a market stand, recycles materials, and finds other creative ways to earn income, relying on word of mouth and clients from her church. Although her business is going well, daily expenses are a constant challenge, especially school fees for her 14-year-old child and high electricity and transport costs. She is part of a stokvel – an informal savings and credit association – that helps her save throughout the year and receive a lump sum every November in time to support her family during the holidays.
Namhla joined Spoon Money in 2020, and since then has been able to save small amounts and take out loans at an affordable cost of credit, with an interest rate of 2.25% per month, much lower than the 50% charged by local money lenders and 30% by the stokvel. Namhla aspires to expand her business, including through digital e-commerce platforms. Right now, she runs her business from her home with no cover, and in winter, when it rains, she is forced to close and lose out on valuable income. She hopes to one day open a proper store with a roof and walls for her business to grow. However, she wishes she could access formal business training to learn how to manage expenses, advertise better, and grow her business.
Beyond financing, Spoon Money has a WhatsApp-based community for women business owners to exchange advice, build networks, and get resources. This community is one of the things Namhla values most about Spoon Money, as it gives her the chance to share tips and experiences with business owners like her and support each other through the everyday realities of entrepreneurship.
Looking back at the past few years, Namhla reflected on the transformational role Spoon Money has played in supporting her financial health, providing quality loans and savings opportunities to support her dream of financial stability and growth for her business.
Spoon Money is demonstrating to the mainstream financial sector that informal entrepreneurs are bankable clients, and that with the right mix of savings, credit, and investment tools, meaningful improvements in financial health are possible, even with modest and irregular incomes.