Finmark Trust estimates that in 2024, three out of every four adults who took loans used the money to pay for essentials. The trend is worse among low-income earners who usually fall into the hands of costly micro-lenders and loan sharks.

TymeBank believes it has found a solution; in partnership with Deel Local Payroll, the bank is introducing Early Wage Access (EWA), a service that allows workers to withdraw part of their salaries before payday. 

Unlike traditional credit, EWA does not saddle employees with interest or repayment obligations. Instead, it lets them access wages they have already earned, reducing their dependence on high-interest loans.

Jarred Deacon, head of Growth at TymeBank ZA, explained the reality employers face. “Corporates spend a lot of their time managing resources, so our teams are inundated with requests from either lending or trying to understand how to manage people’s cash flow. We have many examples where people come through and see how they can access some portion of their money if they have a medical emergency or if they have some type of financial distress. They try their best to really fix that issue.”

EWA has been around for more than a decade. In the United States, over seven million workers used it in 2022, moving about $22 billion in transactions. Major companies such as Walmart and McDonald’s now make it available to staff, and employees increasingly expect the flexibility of drawing wages early.

In South Africa, TymeBank and Paymenow are at the front of this movement, and Deel Local Payroll is providing the cloud technology to make the early wage access process seamless. 

“EWA is a modern fintech product. It uses automation and API integration to streamline the underlying processes, making access easy while taking care of regulatory requirements. By using a cloud-native payroll platform such as ours, financial institutions extend EWA services to businesses and their employees. It’s fast, safe, and keeps overheads low,” said Warren van Wyk, director at Deel Local Payroll.

Concerns about whether workers might misuse the service remain, but so far the evidence suggests otherwise. According to Paymenow, the average worker only withdraws around 10% of their salary ahead of payday. Employers usually set limits, capping withdrawals at between 25% and 30% of earnings.

This level of restraint distinguishes EWA from exploitative credit systems where repayments and hidden charges quickly multiply. More importantly, it provides relief for workers who might otherwise spend hours at work distracted by their financial struggles. In reducing that stress, companies can also gain from improved productivity and employee wellbeing.

For many South Africans, the choice is between an exploitative loan or waiting until payday to cover emergencies. EWA offers a middle ground that gives workers control without trapping them in debt. “It’s amazingly seamless,” Van Wyk added. 

“In some examples, employees can access funds through USSD menus or apps on their phones, and the financial service provider handles most of the due diligence and compliance, not the employer. We’ve often heard that digital innovation can democratise finance for more South Africans. EWA is an excellent example of that promise in action.”

From June 2024 onwards, the strategic partnership will allow Uganda’s civil servants to have early and responsible access to their already earned wages, completely secure and interest-free, via a mobile app. 

EWA is powered by financial technology, allowing employees to securely and conveniently access their earned wages before their regular pay cycle.

EWA is beneficial for employees who need access to their wages in real-time, as it addresses the desperate need for affordable and responsible access to emergency cash – an increasingly prevalent occurrence in an economic environment marked by persistent cost-of-living increases. 

Thiqa specialises in designing and distributing fair and ethical digital financial solutions. They enable under-banked and unbanked Africans to access essential financial tools,  paving the way for a financially-empowered and equitable Africa.

The partnership allows Thiqa to leverage its valuable experience and knowledge of the Ugandan market to address shortcomings in the traditional monthly wage payment systems locally by providing employees with affordable real-time access to hard-earned wages.

Paymenow’s EWA platform has already provided financing to 500,000+ people in Africa and will now extend its reach and services to Uganda via this partnership with Thiqa.

In addition to responsible and affordable early access to wages, the mobile app will provide comprehensive financial education resources for its users, fostering a culture of savings and driving economic prosperity. 

Speaking on the partnership, Danielle Lavan, Chief Executive Officer of Thiqa Digital Finance, said: “At Thiqa, we are developing innovative and ethical products in Africa, rooted in our core principles of fairness, transparency and partnership. Our mission perfectly aligns with Paymenow’s commitment to fair finance, and financial well-being across Africa.

“We are dedicated to empowering salaried workers across Uganda, and are excited to expand our offering with convenient access to affordable finance and financial educational tools. The Thiqa-Paymenow product is unique and will address the daily and monthly cash flow challenges faced by most people between paydays, such as struggling to cover the essentials like food, utilities, transport and medication. 

“By partnering with Paymenow, we are bringing their direct payroll integration solution to Ugandan government employees, helping them bridge the gap between paydays and managing unexpected expenses. What Paymenow has been able to achieve in Southern Africa – growing a customer base of over half a million users – is exceptional, and we look forward to replicating this success and making a tangible impact in Uganda.”

At no cost to employers, government ministries or taxpayers, Paymenow’s platform will provide a cost-effective and credit-independent alternative to traditional financial solutions, significantly enhancing users’ financial well-being.

Independent research conducted over the past three years has consistently demonstrated its significant impact*: 94% of Paymenow users report a higher quality of life, 82% have reduced their debt, and 80% state increased employee satisfaction.

Furthermore, the adoption of EWA solutions like Paymenow’s has been shown to improve employee retention, attract new talent and enhance productivity by alleviating financial stress.

Group Chief Executive Officer of Paymenow Group, Deon Nobrega, commented, “We’re thrilled to join forces with Thiqa Digital Finance, who have an exemplary track record in terms of building Islamic and Shariah-Compliant financial solutions for the Ugandan market.

The traditional monthly pay cycle often leaves employees unable to cover emergencies or seize immediate financial opportunities. With our EWA technology, users in South Africa, Zambia and Namibia gain early access to their earned wages, enabling them to address pressing financial needs.

Together with Thiqa, we aim to empower Ugandans with the financial security and flexibility they truly deserve. Our embedded financial education tools will also equip Ugandans with the knowledge and resources to effectively manage their finances and build a brighter financial future.”

Established in 2019, Thiqa is a Ugandan Islamic fintech company pioneering Shariah-compliant financial solutions, licensed by the Uganda Microfinance Regulatory Authority (UMRA) and the Uganda Investment Authority.

Leveraging its proprietary technology platform, Thiqa empowers entrepreneurs, young people, and the financially excluded in Uganda.

Having engaged extensively with civil servants across different departments to understand their day-to-day cashflow pains, this collaboration aims to revolutionise the traditional payroll process in the Ugandan civil service, whilst directly addressing three United Nations Social Development Goals: Zero Hunger, Reduced Inequalities, and Industry and Innovation. 

The Thiqa-Paymenow Earned Wage Access solution will go live in Uganda on June 3rd, 2024. Initially, the alternative financial solution will benefit select Ugandan civil servants, with plans to expand to cover up to a quarter of the entire workforce by year-end.

Thiqa Digital Finance and Paymenow are also working to extend the solution to employees of corporate institutions across Uganda in a bid to create a positive and lasting impact on the wider Ugandan society.

Thiqa leverages partnerships to create innovative financial solutions that empower citizens. Drawing on its expertise in financial technology, the company partners with purpose-driven institutions to deliver inclusive digital financial tools in a transparent, fair and ethical manner. 

Danielle Lavan concludes, “Thiqa is extremely excited to introduce a different approach and an alternative source of finance for everyday Ugandans, in partnership with Paymenow. Offering interest-free access to an already earned wage, in a way that is responsible and affordable, will significantly improve the quality of our customers’ lives and promote a true savings culture.”