SA-based SmartWage Raises $2m to Enhance Digital Inclusion

Simon Ellis, co-founder and CEO, SmartWage

SmartWage, an innovative HR and communications technology startup, has raised $2 million in an oversubscribed seed funding round.

The fund will enhance SmartWage’s drive to transform Africa’s workforce through digital inclusion, particularly for frontline employees like cashiers, restaurant staff, security personnel, and healthcare workers.

The seed funding included investors such as Idris Bello, founding partner of LoftyInc Capital, a pan-African VC fund headquartered in Nigeria, and an early investor in Flutterwave and Andela, two of Africa’s tech unicorns. 

Bello stated that he was excited by the scalability of the SmartWage product set and the impact it could have, in both Africa and beyond the continent. “The team at SmartWage are innovators – they’re building more than just an earned wage access product, and have recognised that in order to make a tangible impact on employers, they need to build a powerful way for employers to engage with their workforce. We are excited to partner with Simon, Caroline and the powerful team they’ve assembled to support SmartWage’s mission to drive digital inclusion across Africa.”

Other investors included Creator Collective Capital, Penrose Capital, and angels from Naspers, Dimension Data, Investec, as well as Standard Bank. SmartWage plans to deploy the capital to expand its product and technology team and double down on solving employers’ biggest problems.

SmartWage is giving enterprises a simple yet effective way to digitise their most time-consuming HR processes, helping them save time and money in order to focus on what matters most – people. The product gives employees without email the ability to receive company-wide communication, access their payslips, request leave and get access to financial wellness products, all via WhatsApp.

90 percent of frontline employees don’t have or don’t use email, while 97 percent of formally employed people in South Africa use WhatsApp. In a country where most people have less than five apps on their phones, engagement is best when using an existing distribution channel like WhatsApp to reach employees.

Simon Ellis, CEO, SmartWage said: “There is a communication gap. Frontline employees don’t feel part of a company’s brand and its promise. Payslips and leaves are still done manually with paper printouts, while employee communication is done using notice boards or apps, which have huge usage drop-offs. Onboarding and disciplinary procedures are still paper-based, costing businesses precious time, money and resources”.

But it’s not only about driving efficiencies for employers. SmartWage has developed a host of financial wellness products that give employees the financial lifeline they need. These include access to free financial education and on-demand pay.

We have learnt through our process that employees need access to cash more than ever before. 80% of South Africans struggle to make it to the end of the month without relying on some form of short term debt, and the payday loan industry is booming. If we can save employers time and money through digitisation, we can bridge the gap between South African enterprises and their frontline employees, helping enterprises connect clearly and dynamically with their employees, whilst offering financial wellness tools at the same time. By offering tools that benefit both employers and employees, we have a powerful value proposition,” says Ellis.

SmartWage was founded in May 2020 by Simon Ellis and Caroline van der Merwe. Van der Merwe, an expert in the field with almost a decade of experience managing employer benefit programs, says existing software like SAGE, SimplePay, Workday and Oracle has been built for those with email, smartphones and computers, which makes communicating and providing necessary HR services to frontline employees a real challenge. 

What we see day in and day out is that most large companies that employ frontline employees haven’t found a viable way to digitally engage and communicate with their employees, which also means that HR is still largely paper-based and cumbersome,” she said.

SmartWage clients include companies that employ frontline employees, typically in retail, quick-service restaurants (QSR), manufacturing, construction, and hospitality. They have grown their monthly active user base 14x in the past 12 months, and now work with brands such as Edgars, KFC, Debonairs, Seattle Coffee, Truda and Twizza.



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