Sono and Konki intend driving out loan sharks
Negative perceptions about the micro-lending industry could be a thing of the past if soccer icon Jomo Sono and businessman Butityi Konki have their way.
Sono and Konki last week acquired Vecto Finance (Pty) Limited - a micro finance institution relaunched to offer a unique range of financial products to corporate employees.
The revamped Vecto Finance, funded by Investec, sees Sono and Konki owning the majority share of 50,1percent in the company.
The micro-lender promises to ensure that debt-traps, which have, and continue to put many unsuspecting borrowers in debt, will be a thing of the past for their customers.
Konki, a well-known businessman and former television presenter, says: "Vecto Finance provides employees with access to credit that they can repay in a fair and controlled manner, without the exorbitant costs and interest rates associated with traditional loan sharks."
According to Sono, also known as the Black Prince, the micro-lending market suffers from a poor perception, because of questionable business practices.
Sono says: "Vecto Finance has stepped up to the plate to protect people who require a short-term loan."
Though the major banking groups have all, in some measure, entered into the micro-loans market, Konki believes that a large percentage of the market is still badly served by these establishments.
"The need for credit has existed since the inception of formalised labour, yet the lack of credit-worthiness has excluded certain individuals from obtaining funds from the formal financial sector," says Konki.
Sono says that the onus for extending credit need no longer rest on the shoulders of the employer because Vecto Finance takes up the risk and administration of loans for employees - a solution that has been tried and tested.
Sono says: "The company has enjoyed resounding success since 1999, with the average bad debt over the last six years being a minimal one percent of turnover."
Vecto Finance does not add insurance or administration fees to the loans and there are no hidden costs, says Konki. "We are definitely an anti-fineprint company," he says.
Sono and Konki believe that "for the first time ever, a micro-lending company is owned by people who truly know and understand the needs of the customer."
They foresee a growth of 50percent in the first year, with plans to double the business in the second year. It includes possible whispers of other banking services.
"We plan to diversify with other products, including cell phones, insurance, student loans, home improvements and car finance," says Sono