Kagisano strongly believes that the only way to sustain the incredible growth that has been synonymous with this industry over a period of ten years is through the proactive buy-in from the various stakeholders that drive and influence the complex facets of the industry.

These stakeholders have a vested interest in the success of the Industry and fall into numerous economic categories.

These Stakeholders we believe can be classified as follows:

• Governing Bodies (over and under-regulation, reckless lending)
• Financial Institutions
• Small Micro Medium Enterprise
• Entrepreneurs
• Skills Development
• Cash Loan Operations
• Borrowers/Clients
• Unions

Having said this – it is only through defining the interaction of the stakeholders in the Micro Financing Value Chain that it will be possible to formalize a cohesive strategy for the Micro Financing Industry and to set the required benchmarks in a uniquely South African context.

There are a number of forces at play that strongly influence the direction of the Industry and comprises the following:

• The New Credit Bill
• New Payment Systems
• The Policing and Enforcing of the New Credit Bill
• The availability of funding for Organisations that clearly demonstrate their willingness and ability to comply with the necessary regulation.
• The criteria used to determine which Organisations qualify for the said funding.
• Governing Bodies who protect the interest of the consumer (Borrower)
• The ongoing development of Industry associated Skills and the provision of grants for the said development.

It is essential that the correct regulatory balance is struck as the over or under-regulation of the Industry proves to have far-reaching ripple effects.

The question around how much governance is enough to ensure the health of the Industry is regrettably a painfully subjective one.

Careful consideration must be given to the following points:

• The way in which Regulatory decision are formulated.
• Whether or not the Regulatory process is consultative or merely imposed.
• The risks and impacts to the Entrepreneurs that not only provide a much needed service – but incur a huge amount of risk in the process
• The buy-in of Stakeholders
• The degree to which Stakeholders take ownership of this process.
• The impact on the Consumer – who has a desperate need for additional, affordable financing sources – and who is not always in a position to honor his or her financial commitments
• The impact on the Industry as a result of Reckless Lending.
• The way in which governance is policed – in order to ensure the integrity of the Industry.
• Ways in which the profile of the Industry can be lifted
• Industry Paralysis – Reluctant change.

How do we ensure that all the issues related to the Governance Policy for the Micro Financing Industry are in fact addressed objectively while yet obtaining the necessary subjectively – to appreciate the dynamics of the respective Stakeholders that form part of the Micro Financing Value Chain?

The response to the release of the new Credit Bill is in fact an interesting one. Many stakeholders embrace the changes borne as a result of the New Credit Bill, while many stakeholders fear the unknown and engage in gross exploitation of what is believed to be a dwindling opportunity.

This Industry has a desperate need for Corporate Conscience and Kagisano strongly supports and embraces the absolutes that the New Credit Bill introduces to the Industry and the manner is which it will facilitate the holistic management of the Micro Finance Value Chain.

However to ensure the successful implementation of the New Credit Bill it is essential that the correct awareness is created regarding the impacts on the Industry as well as the benefits that will be derived as a result of the said implementation.

Furthermore, Stakeholder buy-in is a Key Performance Indicator that should secure the ongoing contribution of ideas, ideals and practical solutions to challenging problems faced in the Micro Financing Industry - that will shape and define future Versions and/or amendments to the Bill.

The introduction of AEDOS – once again has received mixed reactions. We trust that it’s impact in the Industry will be largely positive.

Questions that arise with regards to the randomness of the AEDOS collection procedure – is met with some discomfort but the fact that all parties stand a randomly equal chance to collect monies owning – sweetens the bitter pill.

The overall intention is to increase the effectiveness of the Debit Order Payments while reducing the incidence of returned Debit Order Payments and of course all the associated fees and costs that are incurred by both parties as a result of the collection process.

There are still many questions that need to be answered with regards to the practical implications and implementation of the AEDOS system – but Kagisano believes that it is a step in the right direction.

The beauty of implementing both the New Credit Bill as well as AEDOS shines a very bright light on the Industry’s reason de entrée.

Ultimately every single business in the South African context should exist to service not only a need but a direct Consumer requirement.

Imposed limitations such as the New Credit Bill and AEDOS ensure that Micro Financing Business differentiate based on Service, Service Delivery and product innovation (within the stipulated guidelines of course)

This process will ensure that Consumers are treated with respect , that each and every client application is in fact evaluated based on merit and not just whim and that clients receive the service and service delivery that they are in fact entitled to.

In addition – there has been a significant increase in consumer awareness not only from a "what is available in the market" perspective - but also with regard to the rights of the consumer and the effective exercising of these rights – there is an abundance of case law that illustrates the fact that consumers no longer take undue or unnecessary abuse and that Suppliers and in the Micro Financing context in particular Lenders are in called to greater accountability.

The Micro Financing Industry must be given due recognition as a formal Finance Sector in the South African Economy.

The Micro Financing Industry can no longer be treated as the underdog or shark of the South African Financial Sector and a career in this Industry should be coveted as honorable and desirable. Awareness must be created around existing and possible career opportunities within the Micro financing Industry. No individual should be ashamed to be associated with the Micro Financing Industry.

Greater emphasis should be placed on the Social and Economic benefits, upliftment and fulfillment of social responsibility ideals that result from the effective and efficient channeling of Micro Financing Funds.

There is a desperate need for the development of Skills for the Micro Financing Industry and yet a shortage exists with regard to the scope of programs available as well as the quality of programs and the associated accreditation thereof. Priority should be given to Skills Development Programs and Grants available to and particularly associated with the Micro Finance Industry.

The Industry faces the following challenges:

• Effective and controlled Industry Policing
• Striking a balance between over or under-regulation
• Social Responsibility within the Micro-Financing Industry – the way in which stakeholders contribute to the overall Social Needs of South Africa
• Attitudes toward HIV/AIDS and strategies to address associated Socio-Economic needs broader than just the Micro-Financing context.
• Attitudinal adjustment
• Defining and testing Assumptions
• Funding and Funding criteria
• On-going development of the Credit Bill and Regulation.
• Evaluation and measurement of outcomes

As a Post-Apartheid South Africa proved to the rest of the world, that democracy can in unite a nation divided. That change can in fact be embraced, welcomed and celebrated.

In the same way Kagisano believes that with a can-do attitude and a receptiveness to change and compliance with well thought out regulation and systems; responsibility and accountability - that the Micro Financing Industry in South Africa will in deed become a force to be reckoned with.

Micro Financing – changes lives, it is each and every Stakeholders responsibility to ensure that this change is positive and reinforces the vision for a New and Empowered South Africa.