SmartWage secures $2 million to enhance digital inclusion in South African enterprises

SmartWage has raised a $2 million seed fund to bridge the gap between South African enterprises and their frontline employees.

The funds will enable the innovative HR and communications technology startup’s vision of transforming Africa’s workforce through digital inclusion, particularly for frontline employees like cashiers, restaurant staff, security personnel, and healthcare workers.

According to SmartWage, 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 phone, engagement is best when using an existing distribution channel like WhatsApp to reach employees.

SmartWage is giving enterprises a simple yet effective way to digitize 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 pay slips, request leave and get access to financial wellness products, all via WhatsApp.

“There is a communication gap. Frontline employees don’t feel part of a company’s brand and its promise. Payslips and leave 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: time, money and resources.” SmartWage's CEO, Simon Ellis stated.

Aside from 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.” Ellis said.

If we can save employers time and money through digitization, 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. — Simon 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, said 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.

The seed funding was accessed via several influential investors. One of those investors is 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.

“The team at SmartWage are innovators - they’re building more than just an earned wage access product, and have recognized that in order to make a tangible impact on employers, they need to build a powerful way for employers to engage with their workforce.” Bello said in a statement made available to Benjamindada.com

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

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.