“South Africans are terrible savers and we borrow a lot of money,” PICSA CEO, Paul Kim, said at a recent panel discussion hosted by Nedbank and the Launchlab.
Farmworkers and other low-income workers often fall victim to predatory micro-lenders, who offer products that are low in value and high in cost. If a worker misses a payment, the costs escalate dramatically as a result of penalties, trapping them in a debt cycle.
Picsa, a financial technology business initiated as part of Stellenbosch University’s business incubation programme, has developed a ground-breaking savings solution to help low-income workers on farms in the Western Cape. The aim of the programme is to improve farmworkers’ financial health through saving and planning for their families’ future.
Picsa founding director, Pieter Wasserfall, investigated the savings options available to low-income earners that allow them to earn inflation- beating returns and found none. He then developed a range of financial products and services based on the principles of a stokvel.
“The aggregated savings amongst workers are then invested into exchange traded funds,” Kim explained.
Farmworkers can now invest in saving solutions for as little as R25 a month “Over a period of just two years, the farmworkers who are part of the Picsa saving solution has managed to save over R1,1 million,” Kim said.
According to the chairperson of the Adama Workers Trust, Rita Andreas, Picsa has made a huge difference to the financial wellbeing of farmworkers. “In the beginning there was some suspicion among workers. But after seeing how their investment has grown, it has inspired them to save even more.”
Visit Picsa at www.picsa.com