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The Rainbow Nation’s Whites-Only Town




Besides white, perhaps the only other color that gets mentioned in Orania is orange.

Orania, a whites-only town flanked by the majestic and breathtaking Orange River, is about 160 kilometers outside Kimberly in South Africa’s Northern Cape province.

South Africa may have entered its 23rd year of democracy, yet this Afrikaner town has no desire whatsoever to be a part of the ‘Rainbow Nation’.

Orania is secluded, separated and solo.

And so on a sunny Tuesday morning, I drive to Orania with my colleague from Soweto, photojournalist Motlabana Monnakgotla. Like him, I am black South African, from Harrismith in the Free State.

Who knew we would one day pull up into the streets of this arid town?

A rusty signboard greets us about 10 kilometers before Orania. We approach with trepidation, not knowing what to expect from South Africa’s only town with no black residents.

There are no walls, security or gates preceding Orania. No grim militarized borders – a la Donald Trump’s proposed Mexico wall – so now that’s a big relief.

Instead, next to a grocery store and the town’s petrol station is a wall rife with color, a festive reminder to the locals of the fun fair taking place later in the year.

– Carel Boshoff (junior)

Our contact is Orania’s Communications and Marketing Director James Kemp, who has agreed to meet us at this location.

The desolate gas station has two dusty petrol tanks; a young white attendant waits idly for the next customer.

While we wait for Kemp in our rented car, some of the locals stare at us, making us aware we are quite conspicuous.

Kemp arrives in a white Mercedes-Benz, and we follow him to a restaurant in a resort located in a leafy part of Orania. As we drive up, the locals we pass wave at us. Their welcome comes as a surprise.

The resort is Aan-die-Oewer, Afrikaans for ‘On-The-Banks’ – situated on the banks of the Orange River. Kemp tells us the area attracts holiday-goers and families through the year because of activities like bird-watching and fishing.

According to the information compiled in Orania’s tourism booklet, the town attracts almost 30,000 visitors annually. An increasing interest in Orania has helped the tourism sector and businesses such as guesthouses, restaurants and a spa have since opened.

We receive a warm welcome at the restaurant and I marvel at the captivating beauty of the Orange River, the largest river in the country.

Even though this self-styled 8,000-hectare enclave is isolated from the rest of South Africa, the community of Orania denies they live in remoteness.

Instead, they say they have chosen to embrace the community made up of Afrikaners only, in order to remain true to Afrikaans’ tradition and culture.

Dr Sonwabile Mnwana, a sociologist and Deputy Director and Senior Researcher at the Society, Work and Development Institute (SWOP) at the University of the Witwatersrand explains Orania was established after Afrikaners felt threatened by issues such as poverty in urban areas and political defeat in the wake of a liberated South Africa.

In order to understand why a community like Orania came into being, Professor Kwandiwe Kondlo, a professor in Political Economy at the University of Johannesburg, says the political and historical context of South Africa needs to be taken into consideration.

In the 1990s, when the idea of a new government was taking shape, Kondlo says negotiations for national liberation were compromised.

“We had a situation in South Africa where the oppressor and the oppressed were declared both victors at the negotiation table, and that never works in the long run. The liberation movement [African National Congress] negotiated with its back against the wall,” he says.

– Annelize Kruger

The outcome of these negotiations was the country’s first democratic elections. And the elections saw a black president, Nelson Mandela, elected for the first time and a black-run government, the African National Congress (ANC), helm the country.

The 1994 elections had been long overdue. In 1989, the former British Prime Minister Margaret Thatcher wrote a firm one-paragraph telegram to then South African President F.W de Klerk to provide a date for Mandela’s release from prison. The White House supported this request and pressure mounted on the Afrikaans leadership to free Mandela.

“On the 10th February, 1990, F.W de Klerk announced in Parliament that on the 11th February, 1990, Nelson Mandela will be released from prison. This announcement came as a surprise to everyone. Not even his friends in cabinet knew about it. The ANC likes to boast about many things… the old man [Mandela] could have died in prison if the Boers were not put under pressure,” says Kondlo.

Economists like Kondlo call the 1990s the New Phase of Financial Globalization, which pushed for a borderless world. However, after 2015, the global political economy started shifting again.

He says that is why, for example, Americans voted for President Trump, as a way of “applying brakes to the wave of globalization”.


A security valve

Orania was established in those turbulent years, in the early 1990s, when South Africa was pushing for unity with every race in the country.

“Orania is a security valve for Afrikaners in a negotiated democracy,” says Kondlo.

However, the notion of separatism and self-determination that Orania has been famously documented for isn’t unusual.

Dr Frans Cronjé, CEO of the Institute of Race Relations (IRR), says people that have actually “exited South Africa” and decided to live in seclusion, are those who live on golf estates and private housing establishments and not just in Orania.

“Even though in Orania, there is just over a thousand people, hundreds of thousands of South Africans have actually made the same decision of going to live in relative seclusion,” he says.

According to Kemp, anyone can move and live in Orania, provided they can fully adopt and express the Afrikaans culture and way of living.

Max du Preez is a veteran Afrikaans journalist and columnist who, in the apartheid years, founded Vrye Weekblad, an Afrikaans-language weekly and the first anti-apartheid Afrikaans newspaper.

“Orania is practicing separatism because they are motivated by fear of being swamped by the majority black society, fear that they may lose their language and culture, and fear of crime. Most Afrikaners don’t share their fears to the same extent. I cannot see modern, urban and professional Afrikaners ever feeling at home in Orania,” notes Du Preez.

However, Kondlo says the elite Afrikaners could “surprise everyone” and move to Orania if the South African government collapses in the years to come.

In the 1980s, the founder of Orania, Professor Carel Boshoff, was chairman of the Afrikaner-Broederbond, a movement known to be the Afrikaner think-tank.

An entrepreneur shows the Oranian currency, Ora

“The Afrikaners are very forward-thinking people. Orania was established as a tactical strategic exit for the Afrikaner, should the new South Africa run into serious crisis. They will then have a place to preserve themselves,” says Kondlo.

In 1991, as the country headed towards a democracy, which Archbishop Desmond Tutu referred to as the Rainbow Nation, a group of 40 Afrikaner families led by Boshoff proceeded to start their own state in the Karoo.

Even though it was established in 1991, the land Orania sits on was initially built in 1963 by the Department of Water Affairs and known as Vluytjeskraal, referring to the place where the town was established. Colored workers lived there, whilst working on building irrigation canals connected to the Vanderkloof Dam.

As the wheels of change started to roll, Boshoff, who is former South African Prime Minister Dr Hendrik Verwoerd’s son-in-law, bought the abandoned 500-hectare land, which has since expanded to 8,000 hectares, for R1.5 million (approx. $521,000 at the time).

He envisioned tens of thousands of people occupying it, yet today, 26 years later, Orania is home to only about 1,300 residents.

Cronjé says this low number shows there isn’t a high demand for an establishment like Orania amongst other South Africans.

Orania’s annual population growth is reportedly about 10% and over the years, political leaders like Mandela, Jacob Zuma and EFF President Julius Malema have visited the community.

“The ANC is moved by numbers and due to a slow rise in Orania’s population, they [ANC] don’t see them as a threat. But remember, an elephant can be killed by an ant,” says Kondlo.

Whether Orania is a community that only has self-preservation at its core or if it’s indeed an enclave for Afrikaners should South Africa experience crisis, remains a burning question.

Boshoff’s son and the current president of Orania, Carel Boshoff (junior), says his father was attracted to the idea of “a sort-of Commonwealth South Africa” and in the 1970s, he had the impression that the idea of a white minority government was unsustainable.

“He did not see a white minority government being replaced by a black majority government very attractive, because [to him] it was just turning the picture around,” he says.

In 2011, after 10 years of leading the community of Orania, Professor Boshoff died aged 83 from cancer. He is buried next to his mother-in-law, Betsie Verwoerd, in a small cemetery in Orania.

The cemetery has several simple tombstones of people who once lived in Orania. A pointy tower rests atop a round tombstone located at a higher point in the big yard, which serves as a monument for Verwoerd’s late wife, Betsie, and Boshoff.

A stone’s throw away is a decrepit water mill structure used in the 1960s. Overlooking the cemetery is a lush green maize field, giving the brown surroundings verdant appeal.

Volkskool Orania

An intentional community

Agriculture is Orania’s mainstay. The town has over 15,000 pecan nut trees as well as wheat and corn fields.

Self-sufficiency is the norm here. All labor in Orania is undertaken by residents and according to records on Orania’s website, the unemployment rate is under 3%.

“If you are lazy and not willing to work for yourself, you will not survive in Orania,” says Kemp, who lived in Pretoria before moving to Orania three years ago.

The residents do all the work such as building houses, service delivery, plumbing, fixing cars, administrative work at the municipal office, farming, legal matters, healthcare, teaching and construction.

A German who brews craft-beer is the only non-Afrikaner we meet in Orania. He moved here 18 months ago and sells his beer in Orania. Kemp says the beverage has proven to be a favorite among the locals.

A soft-spoken Carel (junior) says Orania carries the concept of an intentional community, which means, as a community they are not only looking back but forward as well.

“When people move to Orania, the important questions we ask are ‘what are your intentions, aspirations and ideas for the future’. I am confident to say – in the broader sense – what my father had in mind when he bought Orania is what is still being done,” he explains.

Be that as it may, Lindsay Maasdorp, national spokesperson of The Black First Land First movement, says he has nothing against people who want to preserve their language and culture, but feels differently about the residents of Orania.

“The people in Orania have the highest form of white arrogance,” he says.

Maasdorp says areas like Orania destroy the idea of the Rainbow Nation and instead, its residents only practice racism.

“The idea that white people can cut themselves off the entire country, may seem like they do not want to interact with black people. It’s a stigma attached to us [black people] and the only way we can break that is to take all the land back including Orania,” he says.

A lingering question is how, in working towards a united South Africa, the right to self-determination and a self-governed community was granted to Orania’s founders. Their support is a clause stipulated in Chapter 14, Section 235 of the Constitution of South Africa.

“[In it], the aspect of national self-determination is referred to in broad terms and does not speak specifically to historically-oppressed groups. This aspect was signed by both sides of leadership and the Afrikaner’s strategy was very calculated. That is why in terms of law and the constitution, it is very difficult to confront Orania,” says Kondlo.

The residents of Orania exude a sense of forced friendliness and appear used to the media attention their lifestyle, beliefs and livelihood attract.

Carel (junior) admits scores of journalists have visited Orania, and from his responses, it’s easy to see he knows his answers well.

“We are not multi-cultural activists, we look at our culture and the idea of the uniqueness of culture in a positive way,” he says.

Du Preez opines Orania is not threatening anyone and the community is not a burden on the state.

“I believe they should be left in peace. They’re not the first ethnic/cultural/language community in the world who wants to withdraw from broader society,” he says.

Municipal workers in a van enroute to work

Orania’s entrepreneurs

Sarel Roets is a minister-turned-businessman who moved to Orania five years ago. He owns several businesses and properties here, including a commercial office park. It is modern and located with a perfect view of the Karoo’s brown and rocky plains.

Most of the infrastructure in Orania is stylish and up-to-date.

Roets grew up in a conservative Afrikaner home and says like most Afrikaners, were “originally pro-apartheid”.

He says Orania has exposed the Afrikaners to a life of self-reliance. Most of them had grown up with domestic workers and gardeners who did all the manual labor in and around their homes.Now they do it all on their own.

“We used black labor everywhere we went and had a black lady doing laundry in the house. That is legalized slavery,” he says.

One of the buildings on Roets’ property is Roelien de Klerk’s jewelry shop. Oranzi Pop sells offbeat jewelry, all handmade by her and her assistant who sits at the back of the store. The shop also sells colorful scarves, bags, sunglasses and small, intricately-carved treasure boxes.

My colleague grabs a pair of small flower-shaped wooden earrings for his 10-year-old sister. I too am tempted to buy something, to serve as a souvenir from Orania, but think twice seeing some of the price-tags.

De Klerk has been living in Orania for over 20 years now and says her dream is to start a jewelry school. She desires to pass on her jewelry-making skills to the next generation since she knows there is a gap for such expertise in South Africa.

A majority of the jewelry in her store gets ‘exported’ into the rest of the country, which has helped grow her business and in a small way, contribute to the town’s economy.

Residents are proactive in making a living for themselves in Orania and the town prides itself in being eco-friendly. Every corner in town has clearly-marked bins with labels of what should be thrown in for recycling. Also, every building in Orania is required to have a solar panel.

This part of the country is dry and the sun is scorching, so around midday, all the laborers drop their tools and head indoors to cool off.

We pass a swimming pool and see a mother and daughter walk out with towels around their waists. In front of the swimming pool is a large monument of a koeksister, a sugary deep-fried treat enjoyed mostly by the Afrikaners.

A street away from the pool is a contemporary white building with wide open wooden doors. A few cars are parked in a spacious parking bay on the side of the building. The building is a hair salon owned by Annelize Kruger.

“Oh I fixed my hair just for you guys,” she gushes as we enter her stylish salon. The burgundy walls are decorated with paintings of flowers and other eye-catching drawings. A petite woman sits behind the high counter, looking on silently with a smile.

Kruger says she moved to Orania from Pretoria three years ago because she could no longer take the traffic in the city.

“In Orania, it takes me five minutes to get to the shops, another five to go home and I would still have another 45 minutes to relax before coming back to work,” she says.

Kruger is bubbly and friendly. She says her hair salon is one of many in Orania, and in order to stay ahead, will be opening her own hair academy.

“In Orania, you need to do more than one thing in order to sustain yourself. I asked the Lord what else I can do here and He said I should use what I have. It has been a faith process,” she says.

Kruger says students can come from anywhere in the country. They would have to apply first and then come for interviews before training.

So far, she has one student and says she gets accreditation from the Quality Council for Trades and Occupations for the training.

Kruger willingly smiles for the camera and agrees to pose for the several angles my colleague suggests.

“You can come here all the way from Johannesburg and I can do your hair!” she jokes with me as we leave.

Orania also has its own currency, the Ora. According to Orania’s website, Die Orania Beweging, the Ora has been used since 2004 and was created to promote local spending. It operates like a coupon system whereby, if used to purchase goods in the town, residents are given discounts on their purchases. The value of 1 Ora is equal to R1.

The community uses the Ora to keep their own cash in circulation, while their rands are placed in banks and accumulate interest.

“Since we don’t get funding from the government, we have international partners – called Friends of Orania – who help us with funding. Currently, there is R500 million [$37 million] invested in Orania,” he says.

Monument Hill where former Afrikaner leaders’ busts are displayed

On their website, Friends of Orania is a group of people in Europe, working on creating an “autonomous European organization” with the aim of supporting the Afrikaans community.

Orania also has a community radio station, Radio Orania. The studio is located in the town’s municipal building and boasts basic audio equipment. It is accredited with the Independent Communications Authority of South Africa (ICASA) and its frequency stretches to a radius of about 40 kilometers.

Their programs range from community announcements, poetry and Afrikaans folk music. They don’t have frequent news slots or shows on current affairs. The town also has its own community magazine, Voorgrond.

A 10-minute drive from the radio station takes us to Monument Hill. Here, bust-statues of former Afrikaner leaders look down on the parched town.

Paul Kruger, JBM Hertzog, Verwoerd, DF Malan and JG Strijdom encircle the town’s totem, ‘Die Klein Reus’, Afrikaans for ‘The Little Giant’. It’s a statue of a young boy rolling up his sleeves, demonstrating his readiness to work.

Even though the original artwork of the boy was made by German-born South African artist Elly Holm and given to Verwoerd as a gift, the leaders of Orania have since made this piece of art their icon. Carel (junior) says the busts represent their heroes and choosing to keep them was the obvious thing to do.

“We can’t look at those leaders from the early stages and allow their busts to get buried under dust in store rooms. We need to be true about where we come from as well. It’s not to say they never made mistakes but we are owning up to our history – bad and good. We don’t believe it was only bad,” he says.

In 1948, the National Party governed South Africa led by Verwoerd and because of his role in implementing the apartheid policies in the country, he is mostly called the ‘Architect of Apartheid’.

In a central part of Orania is Betsie Verwoerd’s house, now a museum. Joost Strydom, a Junior Communications Officer at Orania, takes us to it. It looks like any other home, except for Verwoerd’s bust at the front gate that reminds us this is a museum.

Along the pathway leading to the front door, my colleague and I pluck juicy grapes hanging off a steel arch. It feels strange eating from the Verwoerds’ vine.

The museum is filled ceiling to floor with Verwoerd’s pictures, clothing, gifts, collectables and everything else that belonged to him.

In one room, Betsie’s old-fashioned belongings hang from the cupboard knobs and family pictures crowd the small tables in the room.

Atop a doorway leading to the rest of the house, is Verwoerd’s fishing rod. Pictures around the rod show him revelling in his many fishing outings.

His portraits are on small, medium and large canvasses. Small sculptures of him fill almost every corner of the house. His pictures are all framed and one particular image of him is placed in a colorful round-glass bubble.

In one room, in a large glass case, lies the suit he was wearing when he died after being stabbed four times by Parliamentarian Service Officer Dimitri Tsafendas, in September 1966.

Next to the navy-grey suit are things that were in his possession at the time of his death. In a little room next to the glass case, are piles of handmade wooden Basotho, Khoisan and African craft stacked on a counter.

Different kinds of bows and arrows and spears hang on the wall. We are told these were gifts he received from his black counterparts and leaders during his reign.

After 15 minutes at the house, we exit and walk into a warm afternoon.

For a moment, the pleasant weather makes us forget where we were.

Life in Orania

Like the stillness around us, the community of Orania is content. They handle their own affairs and continue building their establishment.

However, internationally, in view of a re-igniting of right-wing populism and changes in the new world order, it can never be clearly known what a community like Orania can grow into, especially if the major state – South Africa – starts facing serious challenges, as Kondlo says.

The advantages that Orania could gain in that respect remain unknown. He avers while the majority of South Africans are pointing fingers at Orania, in hindsight, it is the rest of South Africa that is exposed and vulnerable.

A democratic South Africa could be “a fallacy created to stop bloodshed and apartheid”. Yet, in a place like Orania, it is what could have led to the establishment of “a secured, private enclosure that will shield the minority group in the event of a greater crisis”.

For now, the people of Orania are going about their lives, solo and satisfied.

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Cover Story

Forbes Africa | 8 Years And Growing




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As FORBES AFRICA celebrates eight years of showcasing African entrepreneurship, we look back on our stellar collection of cover stars, ranging from billionaires to space explorers to industrialists, self-made multi-millionaire businessmen and social entrepreneurs working for Africa. They tell us what they are doing now, how their businesses have grown, and where the continent is headed. 

Since its inception in 2011, and despite the changing trends in the publishing industry, FORBES AFRICA has managed to stay relevant, insightful and sought-after, unpacking compelling stories of innovation and entrepreneurship on the youngest continent, in which 60% of the population is aged under 25 years.

 Many of those innovations have been solutions-driven as young entrepreneurs across the continent seek to answer questions that have burdened their communities.

 Always on the pulse, FORBES AFRICA has chronicled and celebrated those innovations – prompting the rest of the globe to pay attention and be fully engaged.

 A prime example of this is the annual 30 Under 30 list, which showcases entrepreneurs and trailblazers under the age of 30 from business, technology, creatives and sports. In 2019, we had 120 entrepreneurs on the list, finalized after a rigorous vetting and due diligence process to well laid down criteria.

 We have always maintained the highest standards of integrity in all our reporting.

 As we transition into the next milestone, FORBES AFRICA reflects on the words of civil rights activist Benjamin Elijah Mays, who once said: “The tragedy of life is not found in failure but complacency. Not in you doing too much, but doing too little. Not in you living above your means, but below your capacity. It’s not failure but aiming too low, that is life’s greatest tragedy.”

 With the transformation in the media landscape, the recent awards given to the magazine for the work done by a hard-working, determined and youthful team, serve as a reminder that we are doing something right.

 Early this year, FORBES AFRICA journalist Karen Mwendera received a Sanlam award for financial journalism as the first runner-up in the ‘African Growth Story’ category. In January, FORBES AFRICA’s Managing Editor, Renuka Methil, received the ‘World Woman Super Achiever Award’ from the Global HRD Congress.

 In reflecting on the last eight years, this edition revisits a few of the strong, resilient men and women who have graced our covers.

For some, fortunes have literally changed, as witnessed in the fall of gargantuan African empires such as Steinhoff. Of course, there have been massive moments of triumph too, which have seen some new names feature on the annual African Billionaires List. There have also been moments of tragedy with former cover stars passing away.

 Africa is ripe for the taking and is seen as the next economic frontier. The unique position the continent finds itself in will no doubt give FORBES AFRICA plenty to report on. Here’s to more deadlines and debates for the next eight years.

– Unathi Shologu

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Having A Ball With Data




Stephan Eyeson started a basketball business at the age of 19. That venture failed, so he tried the data business instead. He is working and playing hard.

First, the facts.

Africa has a data problem. For all the talk about data being the new oil, the continent comprises about 12.5% of the world’s population but only accounts for less than 1% of research output, according to global information and analytics firm, Elsevier.

And Survey 54, an AI mobile survey platform solving the problem of data collection on the continent, wants to offer a solution. Founded by Stephan Eyeson, Survey 54 focuses on providing good quality data essential for governments and private businesses to accurately plan, fund and evaluate their activities.

READ MORE | Owning The African Narrative

“Data in Africa is such a prevalent problem, in a sense of when you are going to start up a business, it is hard for you to get consumer data on say ‘how many people eat out in Lagos every day? what is the transactional value? what are the types of things that people eat? what do they want to eat etc?’ All these things are available in the West but for people who want to move into Africa for business, how do they get their data to make their decisions and how do we make it really easy for them and not just for a startup but for even governments and larger businesses,” says Eyeson.

Fresh out of a master’s program in innovation and management from Loughborough University in the United Kingdom (UK), Eyeson joined Survey Monkey, an online survey development cloud-based software as a service company, as part of the team responsible for building their enterprise function in London as well as looking after customers in the EMEA (Europe, Middle East and Africa). After learning the ropes, he decided to branch out to start his own company to offer a more robust and tailored solution for the African market.

“For people who want to move into Africa for business, how do they get their data to make their decisions and how do we make it really easy for them?”

“The problem around data in Africa and emerging markets is a massive one. So, for us, it’s about how do we become a data platform not just for a company but for governments to help them understand their people easier.”

Data is the first step. Then you need intelligence around that data to enable you to make objective analysis that will shape your decision-making process, as well as provide the foundation for policy-making and budgeting.

“Instead of hiring an agency to go to Ghana and do a face-to-face interview, for example, we look at how governments can get mobile data faster and then how they are able to manipulate that data to get the results they need,” says Eyeson.

READ MORE | The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Due to the dearth of knowledge, Eyeson’s unique understanding for the data space is relied on by many startups and larger businesses who depend on his expertise to drive results in Africa.

“Stephan has great expertise in strategy and high-level corporate business development. Survey 54 has and will be instrumental for companies to make decisions within Africa and emerging markets, making it easier to use and understand consumer data. A platform like Survey 54 is essential for companies operating on the continent,” says Nana Adomako, head of UK & Ghana growth at Taptap Send.

Born to Ghanaian parents in London, Eyeson’s first stint at entrepreneurship began in his early years at university, when his dream to become a professional basketball player was shattered.

“I had a scholarship into America for basketball and that scholarship was taken away due to some technicality with my results so I couldn’t go and so I started a basketball business instead when I was 19. It helped Americans play in Europe and Europeans play in America. I made the system easier. So, players paid a monthly fee to get seen and coaches paid to get access to talent.”

But unfortunately, the business failed to take off because the market was not big enough for Eyeson to remain profitable.

The data business, on the other hand, is huge: worldwide revenues for data and business analytics are forecast to reach $189 billion this year and $274.3 billion by 2022, according to technology market research firm IDC. Even though Survey 54 is in its first full year of business, the company has already secured contracts with multinationals like Colgate, amongst many others.

READ MORE | A Germ Of An Idea

“I was one of Survey 54’s first clients and it has been a pleasure watching Stephan grow the company into what it is today, working with some of the world’s largest brands.

“There is a significant lack of data in the region so the need for a sophisticated data insight product is essential and I believe Stephan’s mission-driven leadership style will enable the company to become one of the largest software businesses driving investments to the content,” says Yvonne Bajela, Principal and Founding Member at Impact X Capital.

The company has recently secured a spot on the coveted Startupbootcamp platform in Cape Town. While Survey 54 is trying to secure a first-mover lead in data on the continent, challenges remain. As the company scales, they will need to overcome the language barrier across the African continent and learn to interpret data by bringing the cultural context into the surveys organizations are seeking.

Eyeson has his eyes set on moving into the US markets as a long-term plan, but for now, the goal is transferring the abundant and ubiquitous asset of data in Africa into millions for his startup.

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The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Companies like Tala are at the forefront of the race to deliver rudimentary financial services to the 1.7 billion people on the planet who lack even a bank account.





Two years ago, Amylene Dingle lived with her husband and 7-year-old daughter in Payatas, an impoverished Manila neighborhood with the largest open dump site in the Philippines. Her husband worked on the security staff in a government building, earning 4,000 pesos a week, the equivalent of $80. She had always wanted to start a business, but she was unemployed, had no money saved, no credit history and couldn’t get a credit card or a bank loan.

Dingle’s fortunes took a dramatic turn after she responded to a Facebook ad for Tala, a Santa Monica-based startup that makes small loans through a smartphone app. After granting Tala access to her phone, through which the app cleverly parses mobile data to assess a borrower’s risk, she got a 30-day, $20 loan. She paid 15% interest and used the money to buy cold cuts, hamburgers and hot dogs. She marked them up 40% and sold them door-to-door, earning $4 in profit after paying back the interest and a small processing fee.

Loan Ranger: Tala founder Shivani Siroya at her startup’s Santa Monica headquarters. She uses cellphone data to establish creditworthiness for people rejected by banks in the developing world. ROBERT GALLAGHER FOR FORBES

Today Tala lends Dingle, 42, $250 a month for her now thriving food business. Her $70 in weekly profits have nearly doubled her family’s income and funded their move to a two-bedroom home in the quiet, clean Batasan Hills district. Tala is thriving, too. Founded in 2011 by Shivani Siroya, a 37-year-old former Wall Street analyst who had worked at the United Nations, it has raised more than $200 million from top U.S. investors, including billionaire Steve Case’s Revolution Growth fund. With estimated 2019 revenue of more than $100 million, Tala is valued at close to $800 million.

Companies like Tala are at the forefront of the race to deliver rudimentary financial services to the 1.7 billion people on the planet who lack even a bank account. Providing them with the basics of credit, savings and insurance is one of the great challenges and opportunities of the century. With access to the financial system, people can buy a car or a home. They don’t have to resort to loan sharks if they face a medical emergency. They are happier. They live longer. They are more productive, and their increased productivity will help lift their nations out of poverty. Serving the unbanked will generate some of tomorrow’s largest fortunes. It is both capitalism’s moral imperative and the route to one of the most significant untapped markets.

While the unbanked pay for everything in cash, an even larger swath of people, the more than 4 billion “underbanked,” may have accounts but struggle to make ends meet, racking up steep fees when checks bounce and resorting to high-interest alternatives like payday loans. Traditional banks alone could boost annual revenue by at least $380 billion if they turned all the unbanked into customers, according to a 2015 Accenture report.

The multiplier effects are staggering. The GDP of emerging-market countries would surge $3.7 trillion by 2025, or 6%, if they adopted a single innovation—switching from cash to digital money stored on cellphones, McKinsey estimated in 2016. Diego Zuluaga, an analyst at the Cato Institute’s Center for Monetary & Financial Alternatives, has studied the likely effects of full financial inclusion: “If we were to give the unbanked and underbanked in the developing world the same kind of access to credit and investments that we have in rich countries, you could easily create an additional $100 trillion in financial assets over the next 50 years.”

Tala founder Siroya was raised by her Indian immigrant parents, both professionals, in Brooklyn’s gentrified Park Slope neighborhood and attended the United Nations International School in Manhattan. She earned degrees from Wesleyan and Columbia and worked as an investment banking analyst at Credit Suisse and UBS. Starting in 2006, her job was to assess the impact of microcredit in sub-Saharan and West Africa for the UN. She trailed women as they applied for bank loans of a few hundred dollars and was struck by how many were rejected. “The bankers would actually tell me things like, ‘We’ll never serve this segment,’ ” she says. 

Where banks saw risk, she saw opportunity. For the UN, she interviewed 3,500 people about how they earned, spent, borrowed and saved. Those insights led her to launch Tala: A loan applicant can prove her creditworthiness through the daily and weekly routines logged on her phone. An applicant is deemed more reliable if she does things like regularly phone her mother and pay her utility bills on time. “We use her digital trail,” says Siroya.

Tala is scaling up quickly. It already has 4 million customers in five countries who have borrowed more than $1 billion. The company is profitable in Kenya and the Philippines and growing fast in Tanzania, Mexico and India.

Rafael Villalobos Jr.’s parents live in a simple home with a metal roof in the city of Tepalcatepec in southwestern Mexico, where half the population subsists below the poverty line. His father, 71, works as a farm laborer, and his mother is retired. They have no credit or insurance. The $500 their son sends them each month, saved from his salary as a community-college administrator in Moses Lake, Washington, “literally puts food in their mouths,” he says. 

To transfer money to Mexico, he used to wait in line at a MoneyGram kiosk inside a convenience store and pay a $10 fee plus an exchange-rate markup. In 2015, he discovered Remitly, a Seattle startup that allows him to make low-cost transfers on his phone in -seconds. 

Immigrants from the developing world send a total of $530 billion in remittances back home each year. Those funds make up a significant share of the economy in places like Haiti, where remittances account for more than a quarter of the GDP. If all the people who send remittances through traditional carriers, which charge an average 7% per transaction, were to switch to Remitly with its average charge of 1.3%, they would collectively save $30 billion a year. And that doesn’t account for the driving and waiting time saved. 

Remitly cofounder and CEO Matt Oppenheimer, 37, was inspired to start his remittance service while working for Barclays Bank of Kenya, where he ran mobile and internet banking for a year starting in 2010. Originally from Boise, Idaho, he earned a psychology degree from Dartmouth and a Harvard M.B.A. before joining Barclays in London. When he was transferred to Kenya, he observed firsthand how remittances could make the difference between a home with indoor plumbing and one without. “I saw that $200, $250, $300 in Kenya goes a really, really long way,” he says.

Oppenheimer quit Barclays in 2011 and together with cofounder Shivaas Gulati, 31, an Indian immigrant with a master’s in IT from Carnegie Mellon, pitched his idea to the Techstars incubator program in Seattle, where they met Josh Hug, 41, their third cofounder. Hug had sold his first startup to Amazon, and his connections led them to Bezos Expeditions, which manages Jeff Bezos’ personal assets. The fund became one of Remitly’s earliest backers. To date, Remitly has raised $312 million and is valued at close to $1 billion.

Oppenheimer and his team can keep fees low in part because they use machine learning and other technology to bar terrorists, fraudsters and money launderers from transferring funds. The algorithms pose fewer questions to customers who send small sums than they do to those who send large amounts.

Remitly transfers $6 billion a year, serving senders in 16 countries, including the U.S., Australia and the U.K., and recipients in 45 nations. In the first half of 2019 it added 15 receiving countries, including Rwanda and Indonesia. The company is not yet profitable, but last year estimated revenue came to $80 million. Oppenheimer sees a huge growth opportunity. Fewer than 1% of the world’s 250 million immigrants are Remitly customers. 

In 2012, Dorcas Murunga lived in Gachie, a crime-ridden neighborhood on the outskirts of Nairobi. She earned $80 a month babysitting and cleaning houses, and her husband made $120 installing elevators. He covered most of their expenses while she struggled to save money. Whenever she had cash, she says, she spent impulsively on clothes, junk food and alcohol. She managed to put aside the $5 minimum balance required to open a savings account at Equity Bank of Kenya, but she had a hard time coming up with the $3 monthly fee. To make a deposit, she took a bus an hour each way and waited in line for an hour at the bank. She closed the account after just one year. 

Like most Kenyans, Murunga was already using M-Pesa, a service created by Safaricom to send money via text message. In 2012, Safaricom, a subsidiary of British telecom giant Vodafone, introduced M-Shwari, a savings account and loan service it integrated into M-Pesa. Two years later, it started offering an account that locked up a customer’s funds for a fixed period at a fixed interest rate.

Determined to improve her finances, Murunga committed to saving $1 a day through her locked account. When she got the urge to buy vodka or a pair of shoes, she says, she’d make deposits through her phone instead. She cut her spending by two thirds, to $10 a week. By 2016, she was saving $300 a year. She had started a business making handbags, and the savings helped pay for design courses. She has invested in real estate with her husband and says she spends more than $200 a year helping friends and family. 

The spark for M-Pesa (pesa means money in Swahili), the first mobile money provider in Africa, came in 2003 from Nick Hughes, a Vodafone executive who managed a five-person team tasked with creating wireless products with a social impact. Hughes’ idea: set up a digital money-transfer system that would operate through personal cellphones.

Since M-Pesa launched in 2007, it has exploded in size and popularity. Kenyan taxi drivers complain when riders try to pay in cash. Ninety-six percent of Kenyan households now transact through M-Pesa. Before M-Pesa, only 27% of Kenya’s then 38 million people had bank accounts. Kenya’s population has since risen to 51 million, and 83% have checking or savings accounts. The service has spread to eight countries, including Egypt and India. Sending less than 50 cents is free. M-Pesa charges 1% to 2% for larger amounts. Through its various subsidiaries, M-Pesa generates some $840 million in annual fees for Vodafone.

The adoption of M-Pesa has had a tremendous impact on Nairobi’s startup scene. Durable-goods providers have introduced pay-as-you-go plans that bring in millions of new customers. For example, three-year-old Deevabits, based in Nairobi, sells $80 home solar systems in remote villages with no access to electricity. All its customers use M-Pesa to make an initial deposit. They pay the remainder through M-Pesa in 50-cent daily increments over eight months. “The presence of M-Pesa has transformed how business is done in Kenya,” says Deevabits founder and CEO David Wanjau, 32. “We couldn’t operate without M-Pesa.”

Dixie Moore used to strain to make paychecks last to the end of the month. A 25-year-old single mother with two small children, she earns $12.25 an hour as an assistant manager at a Bojangles’ fast-food restaurant in Canton, Georgia. In 2011, she was paying $30 a month for a Wells Fargo checking account, but when a bounced check and multiple overdraft fees left her with a $1,200 negative balance, she lost the account. She regularly paid up to $6 to get her paychecks cashed. “I was stuck between a rock and a hard place,” she says. Then a friend told her about MoneyCard, a Walmart-branded product offered by Pasadena, California–based Green Dot, the largest provider of prepaid debit cards in the U.S. Now her employer deposits her paychecks directly onto the card, and she uses it to pay for everything from groceries to dentist appointments. “It has really been a blessing,” she says. 

Green Dot offers a financial lifeline to people like Moore. Until she started using the card two years ago, hers was among the 7% of American households—representing some 14 million adults—that get by entirely on cash. Founded in 1999 by a former DJ named Steve Streit, the company initially focused on teenagers who wanted to shop online. But seeing a larger opportunity, in 2001 Green Dot shifted its focus to adults who were using the card because they had bad credit or couldn’t afford commercial bank fees.

One advantage of cash cards: When users spend all the money on their card, it’s like running out of paper cash. They avoid overdraft fees that can run as high as $35 for a single infraction. The cards also make it possible for users to buy online.

Streit, 57, says that nearly 40% of Green Dot’s 5 million customers were previously unbanked.

In 2007, he struck a deal with Walmart that was a boon for the chain’s then 130 million customers: a cash card with a monthly fee of just $3 (today it’s $5). That’s down from the nearly $8 monthly fee paid by users who bought their cards at stores like CVS. The surge in Walmart card sales helped make up for the shortfall from the lower monthly charge.

In 2010, Streit took the company public. Though Green Dot generated revenue of $1 billion last year, its stock slid 40% this past August as it lowered its revenue expectations, citing the increase in well-funded competitors entering the market. But bad news for Green Dot is good news for America’s unbanked. Smartphone-based cash offerings from venture-backed startups like Chime, a six-year-old digital bank based in San Francisco, and digital-payment company Square’s Cash App are signing on millions of customers.

Harvard Business School professor Michael Chu, a former partner at KKR who cofounded Mexico City-based Compartamos, Latin America’s largest microfinance lender, says the opportunity to serve the underbanked in the U.S. is “huge.” But paradoxically, the richest nation on earth poses some of the greatest barriers to financial-inclusion innovators. A patchwork of state laws intended to protect borrowers from predatory lenders and federal laws that guard against money laundering requires startups to navigate through a maze of red tape.

Another problem: The technology that transfers funds between U.S. financial institutions is old, slow and expensive. While M-Pesa zips mobile money across Kenya in seconds at virtually no charge, an electronic fund transfer from Miami to New York can take two days and cost as much as $40. 

But in the grand scheme these are minor obstacles. The Fed has promised to build a new and improved U.S. transfer system by 2024. Entrepreneurs will lobby—or innovate—their way around the bureaucratic barriers. After all, there are billions of dollars to be made—and countless lives to improve.

By Jeff Kauflin, Fintech, Forbes Staff and Susan Adams, Education, Forbes Staff.

Additional reporting by Anna Corradi.

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