And now, the money show with Steven Critterus on 702. Let's walk the tour. The money show with Steven Critterus is brought to you by ABSAC CIB. Banking on local growth with Club Med South Africa to bring the first resort of its kind to the country. Good evening. Welcome to the program. I'm Steven Critterus. Good to be back with you actually after a short break. My thanks to Matteo Kipe for standing in as always. Always good to hear Mateo on the radio. You hear him in the mornings of course as well with the business bulletins and you'll hear them again in the near future. Plenty coming up today and strangely while there wasn't a lot of corporate news there's sort of a lot going on. Another yet again record price for gold. Some things haven't changed no matter how long I stay away. Fascinated by the big announcement around Canal Plus and Multi-Choice. Finally Canal Plus have operational control. You'll hear from the CEO at Canal Plus in just a couple of moments. And obviously lots to come around local content around the future of Multi-Choice and in a way the future of streaming as well. There was another big warning today about micro financing. In other words, you go to someone, you borrow a little bit of money and you pay it back over time. That's the sort of idea of it. The group that basically represents registered micro finance institutions actually quite concerned in some ways about how this is all panning out. And we talk about the risks of online gambling all the time. But the big danger that's being pointed to, and this is something that happens here and in many other places, is that I can go and borrow money from one micro finance organization and then another and another and another to buy clothes or furniture or something and no one actually knows how much I owe. I owe how much I owe is what I'm trying to say. And that then leads to all sorts of trouble when I can't pay it back. I was wondering if you might know might have happened to you, might happen to someone you know who just got so deep in debt to micro finance institutions that weren't able to get out of it. There's a reason why so many of the organizations that consolidate debt are doing so well. But I'd really like to hear your story. I know you'll have one. You'll know someone who was in this position and please someone who is also able to get out of it. Would be good to hear that story on 0183072 and 0214460567. A lot of people again talking about the state of Joburg. Helen Zille confirmed over the weekend as the DA's candidate to be the mayor of Joburg in the local elections which is still currently due to be held next year could perhaps be held in January 2027. We'll have to see how that pans out. But what I still don't see from the current people the current ANC-led coalition in Joburg is a way of fixing the situation in Joburg. That's what I don't see. There is still I had to go and check that this hadn't happened while I was away. But there is still as far as I can see no transport member of the mayoral committee in Joburg. In other words, there is still no one in charge of fixing potholes in the city. And yes, someone will say, well, some of the roads are provincial and some are national. I'm really not interested. There is no one in Joburg who is in charge of fixing potholes. And until there is such a person, I can't really get a sense that things are going to change. And this is why I think there's quite a lot of political heat around Helen Zille's decision and the decision by the DA to put her forward as their mayoral candidate. Certainly going to make the local elections next year very very interesting. Good to hear from you tonight. Your views on that and other issues. 018307214460567 and of course voice notes tonight please on 07272172.
702. Steven is on the money show 6 to 8:00 p.m. Confirmation today that the French-based company Canal Plus now has operational control of Multi-Choice. In other words, the takeover bid has become unconditional. They'll be a new CEO at Multi-Choice. Calvo Mella is no longer in charge there. He's going to be the chair of Canal Plus's Africa operations and David Mbele becomes the new CEO at Multi-Choice. The CEO at Canal Plus, the new owners of Multi-Choice is Maxime Saada, and he's on the line for you now. Maxime, good evening. I really do appreciate the time. I know you're not on the ground for too long, and you've got a lot going on. Multi-Choice is under pressure from many directions on the face of it. It's losing subscribers. What are you looking for from Multi-Choice? What are you going to do with it?
Well, Multi-Choice has faced significant headwinds, macroeconomic headwinds, energy crisis in a number of countries, inflation devaluation in other countries, and it's done a very good job of establishing itself as the clear television audiovisual leader, media leader in continental Africa. So we're very thankful and appreciative of what has been done and we think the assets are numerous in terms of content production in terms of sports relationships in terms of brands with SuperSport. I mean a number of assets are there. What we're going to do is combine these forces with those of Canal Plus to really bring the best of both worlds and the best available content on the planet to African consumers. And we're going to do that all across Africa since this new company will cover more than 40 million subscribers over 70 countries, 40 of them in Africa. And we'll have 17,000 team members part of this company. Half of them will be based in Africa. And so we are really set to establish this new company as the absolute best value proposition with the best user experience to all African consumers. And we will join forces and bring the best content from both companies to our consumers all across the geographies. And we intend to do that as quickly as possible. David Mbele that you mentioned earlier, our new CEO for Africa will really endeavor to make this a reality for African consumers. As soon as this end of year, we will make sure that the value proposition is improved and enhanced.
So I mean the value proposition is the big thing because there's a hunger for content and entertainment. The trick is to do it at a price that most people in Africa can afford.
Yes, you're right. It's about bringing the best content and investing significant amount of money and resources into bringing the best content with the best potential world-class productions. We Multi-Choice has done in the past sometimes with Canal Plus with series like Chakalamba and Spinners and it's as you know the two companies are the leading broadcasters in the world of Champions League of Premier League of Formula 1 Moto GP of rugby and a number of sports competitions and the challenge is to bring all of this at an accessible price. We're very very careful of bringing the full spectrum of content but also to make sure that the price is as affordable as possible and this will be necessary for us to grow as I mentioned you know the way forward is growing and to grow we need to expand the customer base and to expand the customer base we need to have the full spectrum from you know the most comprehensive and sometimes high-end offers to the most accessible offers so that we can have some consumers who don't necessarily have the means to access the high-end offers to still get their fair share of premium content.
Um, you have very tough competition. I mean, Disney, Netflix, there are others. They have very deep pockets. They have huge resources. Um, they may in some markets even have some advantages over you. I mean, in a way, this is a sort of global fight for a market against very big competitors that you're taking on here.
Yes. Well, you know, this company, I mentioned the 70 countries, the 40 million subscribers. Now we're one of the biggest non-American company in the world. And I said that the ambition is to be among the top five. 5 billion euros in annual investment in content, which is what this combined company will do, is significant even by those American standards. And these companies that you mentioned, yes, in a way they are competitors, but mostly to us they are partners. We buy all of their content. All the American movies, all the American studios have output deals with either Canal Plus Multi-Choice or both. And as you know, Canal Plus has positioned itself as a super aggregator which aggregates Netflix, Apple TV Plus, Paramount Plus and HBO Max into its own platform. So we have rolled out these agreements and we just rolled out Netflix in French speaking Africa and we will continue this strategy. Really our intent is to make their strength our strength and to leverage their content into our own and to make it again as accessible as possible to all African subscribers.
So, so also sorry also want to highlight one big difference. We will invest in local content with local producers all across Africa in movies in series documentaries animation. This is a key area for us and I believe a key differentiating factor going forward. There will be some content produced with world-class standards, but with an African voice, with a European voice, with a voice that is different than the one that is brought forward by Americans. We love their content, but they do things differently than we intend to do in the future.
I mean, there'll be a lot of people in our TV production, our film production industry that are very happy to hear you say that. What's going to happen with Showmax? Showmax was supposed to be the way in which Multi-Choice was going to sort of try and compete in the rest of the world. Um, and yet, as I understand it, it's not making money yet. Are you going to keep Showmax running?
It's a little early to answer that question. We have made no due diligence, and we will now start the detailed due diligence of the company. We have no knowledge of the contract, the structure, the commercial success, the cost, and the investments of Showmax. So, we will need to assess that as we go forward. It's a little early to answer that question.
I'm sorry. No, no, no. I understand, and thank you for the honesty. Um for a lot of South African customers they're going to want to know what's going to change on Multi-Choice by say in the next year. So let's say by July next year or so. You talk about making changes quickly about enhancing about improving the content offering about cost and all the rest. Are we going to see those kind of changes on the Multi-Choice platform that soon?
Yeah, we want to move fast. We believe this will only become a reality when it becomes a reality for consumers and of course we intend to enhance the offer and really to bring more content to our customers all across geographies and we know how to do that because these companies together Canal Plus and Multi-Choice produce more than 10,000 hours of local content. Some of it is not available from Canal Plus on the Multi-Choice areas countries and some of it from Multi-Choice is not available today on the Canal Plus areas. So just by making this content available will bring significant benefit to the consumers of all countries.
I presume this is all really going to be streaming content that would be the way forward. That does mean though in Africa not everyone has access to data in the way that people do in Europe. Are you going to be looking at deals that might include say to subscribers there'll be a data deal in there to make sure they can actually access your content? I mean sure there are millions of satellite dishes across Africa but I don't know how much growth is left in that part in that business.
Well, satellite is very dear to us because you mentioned access earlier and satellite is really the only technology that enables an operator such as ourselves to reach all population and broadband and digital is important because it brings new services but it cannot reach what satellite can reach. So the way we see this thing is by combining both really having a hybrid model where we bring DTH satellite with the best as you know video and audio quality of content and when the consumer has the opportunity to access digital services then these digital services are made available to him for free. So they come alongside and he has a choice of the technology he uses and the services he uses and that's the way we see things going forward really relying on both.
Um there are three South African news channels on Multi-Choice right now. You now are the effective sort of owner of the platform. Um I presume you're going to allow them to continue with their own editorial policies. You're not going to interfere with the way in which they produce and broadcast South African news on the Multi-Choice platform.
Yeah, you presume correctly. We have been in Africa for more than three decades as Canal Plus and we have never done any news channel or show in those three decades. We do not see the point of us being involved in any news. This is not our business. Our business is really bringing entertainment to people and sports of course. So we have made a commitment during the process in South Africa that Canal Plus will not be part of the news operations. We as you know have created a company called License Co. This company holds the Multi-Choice license in South Africa and this company of which we have a minority stake and a minority voting power. So we don't control this company will be in charge of the news and the news channels but we have also committed that these news channels will continue going forward. So all of the current news channels available on the platform will continue to be available on the platform.
Maxime Saada, the CEO at Canal Plus, I really appreciate the time on the money show. Thank you.
The money show with Steven Critterus. Well, listening to that, Duncan McLeod, the founder and editor at TechCentral.co. Duncan, good evening. Quite a sort of bullish case being put forward there by Maxime. And clearly though, there's a lot that they need to do and they want to do it quite quickly.
Yes. Interesting interview. They've got a lot on their plate. You know they're bullish about the African opportunity but I think we should also be aware of the fact that Multi-Choice has been going in the wrong direction for a couple of years now. They've been losing customers particularly at the high end as the market has become more competitive but also as the market has become more price sensitive as the economy hasn't has been trading water for a number of years now. Consumers have been switching out particularly I think people who aren't sports fans have been switching away from Multi-Choice's premium bouquets and choosing streaming alternatives instead as fiber has proliferated across South Africa's cities and towns. The likes of Netflix and Disney and Amazon Prime Video there's a lot of them a lot of choice out there which didn't exist 10 years ago and consumers are voting with their feet and we're seeing that in the Multi-Choice in the DSTV numbers so it's going to be interesting to see what they do but they've promised a full strategic update by early next year and we know that Multi-Choice has already been working on a revamp of DSTV in the way they package their bouquets and talking about potentially more flexible pricing and different bundle options and all that sort of thing. They've also said that they need to compete more effectively for the youth audience against the likes of YouTube and TikTok. We know that kids today get their entertainment on their smartphones and not from big screen TVs. So there's a lot of shifts happening in the market and I think the new management team in South Africa the new management team looking after Multi-Choice has got its work cut out for it in reversing the decline we've seen in recent years.
I mean some of it's quite complicated. You want to get more people. You want to make sure that people who are with you stay. And yet to do that you're probably going to need to charge them less at the same time as you're trying to scale up to take on the sort of big American companies.
Exactly. And I think they're going to have to become a lot more nimble in the way they approach the market. Certainly their traditional customer base and there will be a large subset of their customers are still quite content with the offering as it stands. We've got a dish on their roof and a decoder and they you know they watch the rugby on the weekends and enjoy the entertainment offerings that Multi-Choice and DSTV offer. But the market is shifting particularly amongst younger audiences. And I think what we're seeing the market move to is more sort of an on-demand type of model where people sit down in front of the TV or hop onto their tablet or computer or smartphone and they watch what they want. They're not so much interested in this idea of linear television anymore that you know you will watch the news at 8:00 p.m. for example. People want to increasingly just want to watch entertainment that they want to watch at a time convenient to them. So the market is very much shifting and at the same time I think that consumers are becoming a lot more fickle and they're jumping in and out of packages. You know I know personally know lots of friends who you know subscribe to Netflix or Apple TV Plus for a couple of months watch there and then they switch on to switch over to another platform and consume content there. I think DSTV is going to have to become or Multi-Choice is going to have to become a lot more nimble in the way it approaches the market offering weekly packages for example that allow consumers to come in when they want to. I think they can probably learn a lot from the mobile industry where the prepaid space in particular where people buy data when it's convenient to them and use that data. Um, I think maybe we need to move beyond the model of, you know, you sign up for Multi-Choice and pay a monthly bill to, okay, I'd like to buy a weekend of entertainment now, and I'd like to include some sport with that and some movies. And I think the company's going to have to be a lot more nimble in the way it offers these packages to consumers. And I think the old way of doing things where you subscribe to a bouquet and pay at the end of the month is slowly on its way out.
Duncan McLeod, thank you. Founder and editor at TechCentral. Are you at the money show? 26 minutes after 6, the money show, the marketers. Donna Mongu is a portfolio manager at Macro Solutions at the Old Mutual Investment Group. Tana, good evening. I mean, it's interesting to watch the Multi-Choice story. In some ways, depending on how you look at it, there could be a lot of growth. In other ways, they're under pressure.
Good evening, Steven, and good evening to your listeners. I mean, absolutely. I mean the previous speaker spoke about the pressure that Multi-Choice has been under for the last few years with losing subscribers etc. Um but you know it's interesting it'll be interesting to see what Canal Plus brings to the table. They look like they want to move fast. They've already completed their reorganization and quite importantly I mean they've said that they will you know allow local content to remain within local content and that's I think quite material and important but quite interesting to see what they will do with Multi-Choice to actually bring back subscribers and to grow the new way of actually consuming a TV.
Um another so bored with this conversation but so interested in it too. Another record gold price today and it seems to be pulling platinum up. I mean that sort of fascinating relationship between the two.
Yep. Gold continues to just touch just to keep touching the record highs. And I mean last week we saw with the US Fed once again reducing interest rates and flagging that we might have more interest rate cuts coming in into the rest of the year that just caused more more uncertainty more macroeconomic uncertainty in terms of you know the weakness of the American market and overall geopolitical risks and that is what gold needs but yes it's been pulling up the platinum price because we've been seeing a substitution away especially in the jewelry market from the very high gold price to a smaller but still stronger platinum market. For platinum I suppose we seeing a more structurally positive market going to the end of the decade just given by the deficits outside of just the jewelry market but more in the auto vehicle space given the penetration of EV rather the slower penetration of EV so more structural and see a clearer pathway within the platinum and PGM group metals but yes gold keeps knocking those record highs.
I And um cement is fascinating at the moment. PPC had an operational update today. They're sort of halfway through a kind of I think they call their strategy awakening the sleeping giant. They do seem to be making some progress in that recovery.
Absolutely. I mean the it's just a full month update but it is showing you know execution well evidence of execution from their strategy. And you know what's it's a company that has been under pressure with industry being in over capacity you know within South Africa anyway not having those import tariffs for cement imports but you know you're seeing in the other geographies like Zimbabwe where volumes are growing quite strongly on the introduction of import tariffs protecting that industry and just sort of self-help options that the company is exploring in terms of selling non-core assets, driving efficiencies, reducing costs to drive profitability and improve margins you know which speaks to the turnaround plan and I think we're going to start seeing this early days but we're going to start seeing the fruits of this toward the end of the decade.
Donna Mongu, thanks very much indeed. Really appreciate it. Portfolio manager at Macro Solutions at the Old Mutual Investment Group. You have the money show just gone 6:30. The Money Show with Steven live on 92.7 and 106 FM streaming on the Prime Media Plus app and DSTV channel 856. But you heard the conversation a little earlier about the future of Multi-Choice. What for you would make you choose one streaming service over another? But I think for most people it is simply about content. Price is a factor. They're all priced sort of roughly in the roughly the similar sort of space at the moment I suppose. Depending but what for you has made you choose the streaming service that you're using at the moment. Be good to hear from you on that this evening. The launch today of a new renewable energy company. It's called Anthem. It's the result of a merger between the IDEAS Fund, the MLA Energy Fund and No Fund. The company says that they will be able to drive investment in green energy in southern Africa. The CEO at Anthem is James. James, good evening. I really do appreciate your time. So, you've created this company from these funds. What are you planning to do? How are you going to drive renewable energy investment in Southern Africa?
Hi Steven, thanks for having me. Yeah. Well, the formation of the business is actually the coming together of established entities in the renewable space, African Clean Energy Developments, which was formerly a delivery and development platform standing alone, and our sister company Africa, which was an asset management company running the plants that we would develop and deliver. And so together we have put the component parts into a single entity. It's called Anthem. And as you mentioned those are the shareholders in this new platform. So we have a live project portfolio of about 2.7 gigawatt of projects. 1.1 gigawatt of those are already operational. A mix of wind and solar mostly in the renewables program REIPPP selling to Eskom but of late we've been developing projects and selling it to the private market and we've got some presence in Eswatini and we plan to continue doing what we've been doing. We're building 450 megawatt of projects and we're going to be closing more than that in the near term.
There's still, it seems to me bizarrely after all this time, a little bit of policy uncertainty in the sort of private market space. Yes, NERSA, the energy regulator, has given trading licenses to certain companies. Eskom's gone to court to try and stop them. Is that going to slow you down at all? The fact that policy is still not as certain as really it should be by now.
Uh, we like to think you can't fight common sense. You know the country's got to transition away from coal that fleet will be decommissioned over time, but we've got to do it slowly. We've got to do it in a considered way. And I think one of the key things Anthem is about is working as a collective and making sure we engage with government and Eskom and the regulator in such a way that we do it in a considered fashion. So yes, those are hindrances at the moment, but we think reasonness will prevail and we'll be able to continue growing in the private sector alongside Eskom's decommissioning and indeed their own growth plans in the renewable space. I think the advent of the wholesale market which is due to open up next year will be a real step forward in kind of leveling that playing field and all of us being able to compete on a level footing.
So I mean I completely agree with you over the longer term. I was interested to see and there have been several points of data about this that while there was sort of stage six load shedding companies and homes invested everything they could in solar renewable energy then a lot of that investment fell away or dropped off the moment load shedding stopped. In the shorter term do you still see the market and I imagine James you're about to tell me how expensive Eskom power actually is.
I yeah I mean look the again these things just have to happen because we got to keep the country growing and power plants no matter what the technology have a particular lifespan. I think a lot of the investment into rooftop solar you know was quite reactionary but it's still necessary and it's a segment that we think still needs to grow. So it's just a matter of time and a matter of transition and we're in the beginning stages of that transition and it's not renewables only but it's renewables alongside other technologies to ensure we can just all keep moving together.
The real issue I think is going to be cost. And so if availability starts to fall away at least in for lots of companies and in suburban areas there's still load reduction of course. But Eskom electricity is very expensive and is only going to get more. So the plants that you invest in how do they compete on cost? Are they significantly cheaper than Eskom at this point?
Uh I mean these are sensitive commercial matters often privy to PPA confidentiality but typically we're able to beat conventional power. Yes. Both in solar and in wind. And we're even seeing the competitiveness of solar and wind become more attractive. Again, it's about the time of day you're looking to deliver this power and when you're competing with base load relative to the demand. But no, it's competitive power. It's no longer alternative. We're in the mainstream. It just makes economic and environmental sense.
There are places in the world that politically are very much against renewable power and yet are investing in it at a huge rate. I mean, Texas is the first one that comes to mind, but there are other places like that. The economic case, it seems to me, is that renewable energy is probably only going to get cheaper over the longer term, and you obviously want to be a big part of that wave.
Yeah, I think so. I mean, there's obviously certain limitations. We can't produce it for free, but the growth in the technology and the pace of change has been radical. Both in terms of the scale of the turbines we're building today relative to the turbines we were building when we started out back in 2010 2012 they've tripled in scale similarly PV modules have too so it's a case of technological advancement efficiency on the production line and then also efficiency in the conversion of power you know on site so it's been incredible to see. We almost can't keep up even with the permitting we're doing. We keep permitting larger and larger development envelopes, we call them. So, sort of tip heights and blade lengths and tower heights and by the time the project comes closer to construction. They take a long time to develop. Yes. It's often the case that we're having to go and relook at the permits we applied for a few years prior because the technology has advanced so much and that comes with a lot of cost saving too which is fantastic for the general public and also obviously the private power users we're selling to. We sell to the likes of Sasol, Sappi, Rio Tinto's, Richards Bay Minerals.
James thanks very much indeed. The CEO at Anthem 8 minutes now to 7. The money show Steven Critterus is brought to you by Absa CIB banking on local growth with Club Med South Africa to bring the first resort of its kind to the country. Thanks Minister 7 the time. Well, I'll be interested in your view on this. We've seen challenge after challenge against the new in new employment equity targets that have been brought in by the employment and labor minister Nomakhosazana Meth. Now Business Unity South Africa joining these groups. The targets came into force three weeks ago. Earlier today on 702 Drive, John Perlman spoke to the CEO at BUSA, Khulekani Mathe, who explained the basis of their challenge.
Our challenge is not to the principle of transformation itself to actually support transformation. What we're asking the court here is to help us resolve the issue of how the sectoral numerical targets were developed and finally implemented. We set out in our papers the fact that there was limited consultation time given to employers in some instances less than a week. There was insufficient information provided, insufficient analysis of whether these targets were actually achievable from sector to sector.
Well, that was Khulekani Mathe speaking on 702 Drive with John Perlman earlier. Kalob Emodisuri is a labor law analyst joins us now. Kalob, good evening. I really do appreciate the time. From what I can see, much of the challenges about technical issues, the way in which the regulations were passed. Is there a strong case to strike down these regulations?
Yeah, the challenges so far, Stephen, and good evening to your listeners as well and to you. The challenges look very technical because I think this is the third challenge on the record. The first one was the DA one which still has a judgment pending. The second one I think was with NASA and Sakilinga which was an agent one and the judgment came out and it was lost on a technical issue as well. But it seems the BUSA is approaching this on a slightly different angle. I haven't yet seen the papers they have before court but it would seem that the challenge is slightly different. The question though might be whether it's the horse has not already bolted which was one of I think the reasoning that came out in the NASA court judgment. Quite interesting times indeed.
Well, I mean, I was slightly surprised that BUSA of all people would go to court, you know, after the case, after they were brought in. Everybody knew when they were coming and everyone knew what they would be.
That's exactly the question around whether or not the horse is too late that horse has already bolted or not. And what's interesting is that they're taking the case to the labor court whereas the DA and NASA's cases have gone to the high court in Pretoria. So it will be very interesting to understand in addition to their timing but also understand their reasoning for taking the matter to the labor court as not elsewhere over and above not taking it earlier than right now.
As I understand the law and the constitution on this, government has the right to legislate for employment equity to institute affirmative action. There are other cases around quotas. Some of those have seen government regulations or laws being struck down. How far can government go in enforcing what if I've understood it correctly in this case is the word targets?
It seems to me that there are two or three issues at the heart of this. The first one which is probably the angle that the DA was coming from was that the matter is about setting quotas and the argument was that quotas are by law not permitted. So that's the first angle. I think the second angle is around the which is part of what BUSA seems to be raising this instance is that the targets themselves don't seem to be realistic but more importantly for the purpose of fairness both procedural and substantive is that the argument seems to be that there has not been sufficient consultation with the stakeholders and where there was some consultation even a superficial one. Many of the points raised in and they mentioned that specific points were not taken into consideration by the minister and therefore the argument seems to be that there was a rush to set the targets and the targets are not realistic. So that's the second argument the line of attack that seems to be on this case and I think the last one is around whether or not the targets are realistic and achievable and just maybe to mention one quick example of this. I was consulting with a client in the last two weeks and one of the questions he raised was I don't know how to deal with the new employment equity act. I've always supported it in my previous careers across big corporates. Now I run a small business that employs no more than 500 employees. Three of the people on my management team are also shareholders. Now do the targets mean that I have to get rid of them because they specific profile I have to get rid of them in the next five years or not? So there's a degree of uncertainty about what the target set actually means sectorally and I think that's one of the issues and the question then is how exactly is it put before court for proper ventilationist argument to then address the issues.
There's going to be a big fight I suspect it's going to go on and on. Kalob Emodisuri, thanks very much indeed. Labour law analyst. You with the money show 7:00. The Money Show on 702 Monday to Friday 6 to 8:00 p.m. Well, the organization Micro Finance SA it represents micro finance
Organizations that are registered. They're calling for more responsibility from groups that offer what I suppose you would call buy now pay later products and they're concerned that more and more people are falling into debt and have no way of getting out of it. Leoni Fan Pletton is the CEO of Micro Finance South Africa. Leoni, good evening. We all know how dangerous this phrase is, buy now pay later. What have you noticed that's changing in the market?
Yes, thank you so much for the opportunity. I think there's a huge difference between a layby and a buy now pay later product. So, basically what you do is you go into a store or you go online and you purchase a product but which you get immediately but you pay it off in different installments. Now the association we welcome innovation we welcome new financial products. However, what is concerning for us is the unrecorded debt exposure from the consumers. So this debt is not uploaded on the credit bureaus which leaves other credit providers blind when they are offering credit. And there's also some consumer protection gaps. Though unlike regulated credit under the NCA, BNPL providers often have limited obligations for affordability checks or disclosure of risks. So what we seeing now is over indebtedness, systemic risk and we are just calling on regulators and on these buy now pay later providers to work with the association to get to something sustainable.
Are you seeing new entrance to the market or is it new sort of buy now pay later products? I mean what's leading to this particular moment?
So I think the buy now pay later products are exploding just to say it the best I can. More consumers are using this product because they can't get credit to legal access to legal credit where they have to do affordability or a credit check. So this is actually it operates outside of the national credit act and this is where consumers will get credit but don't usually afford the credit within the regulated space. So we are seeing consumers stacking up these products and then having difficulty to repay other credit providers and they would rather pay these BNPL products.
So I mean the major problem is that as you pointed out there's no sort of central registry. So I can go and get a buy now pay later product from this person, that person, then that person and someone else and no one knows how much I owe and then I simply can't get out of it. The only way really to get around that is some kind of central database and that would be very complex.
Yes. So I think it is not that complex. Submissions to the credit bureaus can be done and I know these BNPL providers are speaking to the South African credit risk and reporting association to see how this can be uploaded but we also feel a very much needed affordability is required to see is can this person actually afford this line of credit because they would usually get the client from the formal market. So then they would go to these BNPL players that play in this gray market and they would get access to this line of credit.
