In a Johannesburg township lives an entrepreneur; one who is going about his business in a uniquely African way.
Miles Kubheka’s business ‘Gcwalisa’ is a shipping container-based retail outlet kitted out with bulk dispensers, apportioning essential goods like maize and sugar. The store operates on a weigh-and-pay basis: Kubheka purchases goods in bulk from food manufacturers, taking advantage of the wholesale discounts. He passes these savings on to his customers, who only pay for the amount they choose to purchase. Goods are brought home in reusable containers, further reducing costs.
The idea behind Gcwalisa was born from the reality that many township residents’ shop at pricier local stores, which sell goods in smaller quantities. According to Khubeka, these items often come with a markup of 30% – 50%. Additionally, he says that packaging can contribute around 8% – 15% to the overall food cost. “We believe that people are not poor – they are poorly paid – and oftentimes, poorly paid consumers bear the brunt of poverty tax, where food and other household items are more expensive when not purchased in bulk,” he has been quoted as saying.
Incremental purchasing – an African way of doing business
Miles’ business is a beautiful example of incremental purchasing, which – in this context – means to pay for something bit-by-bit or to only pay for as much as you need.
This is not a new concept. Think of lay-by, a cornerstone of the SA economy. Lay-by allows individuals to pay for an item in instalments, interest-free, with the item remaining at the store until it is paid up and the consumer can take it home with them. However, what we are seeing is the rapid growth of incremental purchasing aided by tech, which is now becoming embraced by all facets of African business.
Why is incremental purchasing so popular here? Firstly, with a vast number of consumers under severe financial pressure or living in poverty, options that allow people to only pay for what they need are highly attractive and make financial sense. Secondly, is the continent’s unbanked status. In SA, for example, almost a quarter (23.5%) of the country is unbanked, with a sizeable informal economy (which accounts for 29% of SA’s GDP), and so contracts that require the holder to have a bank account or commit to a monthly debit order on a fixed date (when their money might come in at different times of the month) simply don’t work here.
Pay-as-you-go everything
Think of pay-as-you-go. Telecos have always been ahead of the game – today, you can even buy one-day TikTok and WhatsApp packages. In the early days of telecoms, the landline was the vastly more affordable, widely-scaled and government-funded option, meaning that almost every household had access to one. When mobile phones entered the market, they came with higher costs – for the device as well as call and SMS charges – meaning they were largely inaccessible for most people, barring the business elite.
Telcos had to figure out how to drive mass usage so they introduced the pay-as-you-go model, which was quickly embraced by Africans across all earning categories. You know how the story ends: today, landlines are rarely seen, except in office buildings. In time, they will go the same way as the fax machine: into tech obscurity.
Then there is a South African financial services start-up that caters primarily to low-income consumers. What did it do to make payment easier for its customers? It recognised that a large part of its consumer base belonged to the informal economy, which meant that they didn’t necessarily get a paycheck on the same date every month. So, it allowed clients to pay their premiums at different times of the month, via different means, and in different amounts, adjusting cover levels up and down with what the policyholder could afford while always maintaining a base level of cover. This is not only smart, but it also drives financial inclusion. It’s financial services, the African way.
We’re seeing a similar pattern in streaming. Consumers now want over the top (OTT) providers that allow for the incremental consumption of content through more flexible payment offerings and hybrid subscription models. Africans don’t want steep subscription fees or debit order commitments; we want the pay-as-you-go of streaming. Telco banks, again one step ahead, have realised this and are feeding our consumption.
Viu South Africa, a streamer that understands emerging markets better than most, has been there from the get-go. While it offers a monthly subscription, viewers can also subscribe for a single day or week – or even enjoy its content for free, with ads. It knows that its viewer is typically a mobile-first, cash-conscious consumer, who might be distrustful of financial institutions (and thus loathe to pay via debit order) and so it allows payment via different methods. Most importantly, it understands that its audience is community-centric, meaning that viewers will likely share their login details with friends and family. And so, it doesn’t try to restrict this behaviour with password crackdowns – rather, the streamer embraces it, with no password restrictions or limits on content downloads.
Pay-as-you-go is innovation, the African way. And businesses that want to succeed on the continent are realising this, and changing their models to embrace how we do things here.
And really, it’s about time.
