MICROCAPITAL STORY: International Finance Corporation (IFC) signs a partnership agreement with WIZZIT Bank, introducing microfinance services to the poor through their mobile phones.

International Finance Corporation (IFC), a member of the World Bank Group, has signed a partnership agreement to take a 10 percent equity stake in WIZZIT Bank, a division of South African Bank of Athens Limited that specializes in banking services to the poor through mobile phones.

Established in 1956, the IFC provides loans, equity, structured finance, and risk management products to support private sector investment and expansion in developing countries. Through their partnership, IFC plans to help WIZZIT with market and operations expansion, as well as seeking out local partners. The WIZZIT partnership is part of IFC’s focus on brining financial services to the poor in Africa to help lift them out of poverty. According to Mohsen Khalil, director of Global ITC- The World Bank Group, there are 3 billion mobile phones being used globally, making it the largest distribution platform for social and economic services, including banking for the poor.

WIZZIT Bank enables customers to access financial services using mobile telephones. First launched in May 2005, WIZZIT focuses on townships and rural areas throughout South Africa where access to financial services is traditionally unavailable. WIZZIT employees bring the banks to their customers through temporary tent stalls set up in various poor communities and rural areas.

According to Brian Richardson, CEO of WIZZIT, there is an estimated USD 1.7 billion “hidden under mattresses” of the un-banked in South Africa. WIZZIT estimates that 80 percent of South African farmers do not have bank accounts because there are no banks within reasonable traveling distance. With WIZZIT stalls set up in rural communities, farmers are educated by WIZZIT staff and have access to a savings account through their mobile phone. Out of a total population of 47 million, 30 million people in South Africa have mobile phones, but only 11 million have bank accounts.

Financial services in Africa are traditionally expensive and inconvenient. With the WIZZIT model, clients pay less than 6 US dollars for a savings account, with an ATM card, accessible through their mobile phone. The WIZZIT product is a low cost, transactional bank account that uses mobile phones for secure person to person payments, money transfers and prepaid purchases, including a Maestro debit card that can be used for retail purchases. There is no monthly fee or minimum deposit, and customers pay per transaction using a pre-paid card. Transaction costs are kept to a minimum at forty-three cents for a WIZZIT to WIZZIT transfer, less than one third of the cost of traditional finance institutions in South Africa. WIZZIT also offers an internet banking service.

WIZZIT “employs the unemployed”. New customers sign up through WIZZkids, formerly unemployed members of local communities, with direct connections to potential clients. In this way, new clients are recruited by word of mouth, fast and at low cost. “WIZZkids” are paid based on how many new customer accounts they open. Currently there are approximately 2000 WIZZkids throughout South Africa.

WIZZIT plans to expand its services to neighboring African countries. They have received inquiries for their services globally, including countries in Latin America and Asia.

By Melissa Duscha

Additional Resources:

IFC: http://www.ifc.org/about http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=27D5BE48669A2C1C8525739A0054055F

The South African Bank of Athens Ltd.:http://www.bankofathens.co.za/home/

WIZZIT: http://www.wizzit.co.za/

http://www.wizzit.co.za/media/wavinghand.pdf

http://www.wizzit.co.za/media/reinvented.pdf

http://www.wizzit.co.za/media/revolution.pdf

Youtube: http://www.youtube.com/watch?v=2SKhCYoF0Lg