BSI2000, Inc. (OTC Bulletin Board: BSIO) announced today that it has signed a letter of intent with a South African company to establish a major banking system to serve rural South African societies that are currently cash-only economies.
The agreement with Mudengu Resources Holdings, PTY, LTD. of Johannesburg, calls for the establishment of a new joint venture company to operate a bank in South Africa that will be based on BSI2000's MicroBanker 2000(TM) technology. Mudengu is a South African holding company that owns six subsidiaries active in mining, construction, electronics, information technology and import-export. The new joint venture will work closely with the two million-member United African Apostolic Church.
BSI2000 launched a demonstration program last September in a remote area of South Africa to store several megabytes of data including a four-color, high resolution digital photo, images of multiple fingerprints and basic name and address information as well as bank account balances, security, authorization and an audit trail on optical cards for each account holder. The system, designed to work anywhere in the world in areas with limited or expensive telecommunications, would also be highly suitable for use in India, China, Pakistan, Russia, Eastern Europe and Indonesia. Banking analysts estimate the size of the emerging microbanking global market at $1.1 trillion.
Service to rural South Africans is expected to begin with basic savings and cash debit services and ultimately could include loans. An estimated 10,000 people, including several South African government officials, attended the opening of the bank building when the technology was demonstrated last September in the far north of the country.
The launch of the joint venture is contingent on the signing of a final agreement between Mudengu and BSI2000 and funding of $1.25 million by the Overseas Private Investment Corporation. BSI2000 and Mudengu hope to begin operations by the second half of 2004.
BSI2000 President and CEO Jack Harper said, "Millions of South African citizens have never had access to standard bank services. This means they have no way to safely bank their funds, earn interest on deposits or carry on routine banking activities that many of us take for granted. We intend to change that.
"Most of the money in South Africa's cash economy is currently dormant and not really circulating or helping the economy grow. An interesting side effect of MicroBanker 2000 will be that the enormous amount of free currency floating around today in South Africa will be vacuumed up. When that cash is deposited in the bank, it will become available to be loaned back out to support further growth. A South African government official says that MicroBanker 2000 should provide a dramatic lift over time to the financial well-being of millions of South Africans with a corresponding lift to the country's overall economy.
"There is still a good deal to be accomplished. We are actively seeking the participation of a major South African bank to interface with our system. Once the final agreement is signed between us and funding is in place, we believe we can move rapidly to roll out our banking services in close cooperation with the United African Apostolic Church.
"We are particularly delighted to have greatly strengthened our position in South Africa by establishing a close relationship with Mudengu. They are fully equipped to provide us with the resources necessary to make the project successful."