This article was written by Odette Bester, Digital Marketing Manager at Lulalend, a South African fintech startup that provides small business loans. Accion Venture Lab has partnered with Lulalend since 2016.
Hillbrow has always been a notoriously impoverished and dangerous Johannesburg neighborhood. There are signs of hope, however, as community organizations like the City Improvements District and private companies are working to create access to new opportunities for local residents.
One notable example is in the area of education. With a handful of public and private schools in the area, few children complete their schooling. For those that do, there are limited options for further education, due to both the inferior quality of their education and the cost of tuition. The odds are stacked against young people in Hillbrow, impacting their job potential. But on the edge of Hillbrow, in a nearby suburb, there is now an option — a campus of the Institute of Management Accounting and Strategy (IMAS).
Nkosinathi Thela, CEO of IMAS, saw the need to address the shortage of skilled accountants and finance managers identified by the South Africa’s National Skills. He established IMAS in 2013, aiming to not only broaden access to high-quality professional accountancy education, but also to serve those in poorer areas of Johannesburg who don’t have the means to get to colleges further away from where they reside. An IMAS diploma costs less than half of the fee for degrees or diplomas at universities or other private colleges.
Enrollment has increased each year. In 2016, 461 students enrolled, and their goal for 2017 is 800 registered students.
As is often the case for new businesses, access to working capital to pay overhead expenses such as rent and salaries has been one of Nkosinathi’s biggest challenges. In early 2017, he found that a shortage of working capital was threatening growth and sustainability for one of their campuses. He was worried that they would have to shut down and come up with contingency plans to accommodate students at their other campuses, inconveniencing students and affecting employees’ jobs.
Many traditional lenders felt the business was too young to be offered any credit facilities.
So Nkosinathi started looking at alternative options, and says he found a trusted partner in Lulalend. “Lulalend took more into consideration than just the type of business,” he adds. The funding they received covered their increase in rental costs, ensuring that they could retain their staff and continue providing an excellent service that attracts more students.
“Our students come from all walks of life and different economic backgrounds. Some of them are from lower income homes where the injustices of the past have placed them at a disadvantage. These are some of our most motivated students, trying to build a better future for themselves. Many of these students study part-time because they can’t afford to put their jobs on hold. They rely on that for a steady income for their families,” says Nkosinathi. “The qualifications they receive from IMAS will help open doors to opportunities that would otherwise not be accessible to them. With a CIMA Professional Qualification, recognized worldwide, our students are no longer limited to one or two career options when they finish. This qualification can help pursue further studies or a career in investment banking, professional accounting, auditing, financial reporting, fund management, education, corporate finance, management consulting, and even entrepreneurship.”
In an economic climate where Labour Force Surveys for 2014 and Statistics South Africa estimated that 60% of workers earn R4,200 a month (roughly $318), a CIMA qualified accountant can potentially earn up to 10 times more than that. A bump up into that financial bracket can have a significant impact on IMAS students as individuals, as well as on their families and their greater community.
Says Lulalend CEO Trevor Gosling, “The bigger picture is that IMAS’s students will go on to build our economy. They will become employees of a local business and have the potential to start their own — continuing the cycle of job creation in South Africa. At Lulalend I never want us to lose sight of being an impact-minded lender that offers financing to small businesses for their immediate needs but also their long-term success, and the far-reaching effects that can bring with it.”
Lulalend is glad to be able to provide IMAS with access to business financing that can help them prepare their students for careers that will have a positive impact on their lives, and the lives of those around them.
For more stories on Lulalend’s work with small businesses in South Africa, visit their blog.