RISK WARNING NOTICE FOR COOPERATIVES AND MEMBERS

Qalo Ya Afrika 25 (Pty) Ltd | FSP 53364

PLEASE READ THIS WARNING CAREFULLY. BY ACCESSING AND USING THE QALO YA AFRIKA PLATFORM, YOU ACKNOWLEDGE AND ACCEPT THE SUBSTANTIAL FINANCIAL RISKS DESCRIBED BELOW.

This notice is provided to ensure that all Cooperatives and their Members understand the significant risks involved in investing through the Qalo Ya Afrika platform. Qalo Ya Afrika is a facilitation platform only. We do not provide financial advice, endorse any specific investment, or guarantee any outcomes.

1. Nature of the Investment Risk

a. High Risk of Total Loss: Investing in Small and Medium Enterprises (SMEs) is inherently HIGH RISK. You must be prepared to lose some or ALL of the capital you contribute. SMEs have a higher failure rate than established businesses. Economic downturns, market changes, operational challenges, or poor management can lead to business failure and the total loss of your investment.

b. Illiquidity: Investments in private SMEs are NOT liquid. There is no guaranteed market to sell your Cooperative’s investment. You may be unable to access your capital for a significant period (typically 3-7 years or more). You should only invest money you can afford to tie up for the long term and can afford to lose without affecting your financial wellbeing.

2. Platform and Process Risks

a. No Financial Advice or Endorsement: Qalo Ya Afrika’s vetting of SMEs is for basic operational legitimacy only (e.g., company registration, director verification). This is NOT a due diligence report, a credit check, a guarantee of performance, or an endorsement of the investment. We do NOT assess the viability, profitability, or suitability of any SME for your Cooperative.

b. Your Responsibility for Due Diligence: The SOLE RESPONSIBILITY for conducting thorough, independent due diligence on any SME rests entirely with the Cooperative and its democratically elected leadership/Investment Committee. This includes, but is not limited to:

1. Reviewing all business and financial documents.
2. Verifying claims and projections.
3. Assessing the management team.
4. Understanding the competitive landscape.
5. Seeking independent legal, financial, and tax advice.

3. Reliance on Third Parties:

We rely on eNL Mutual Bank for FICA/KYC verification and banking services. While we select our partners carefully, Qalo Ya Afrika is not liable for any acts, omissions, or failures of these third-party service providers.

4. Cooperative-Specific Risks

a. Governance and Decision-Making Risk: The performance of your investment depends heavily on the skill, judgment, and diligence of your Cooperative’s leadership and Investment Committee. Poor investment decisions, conflicts of interest within the Cooperative, or inadequate oversight can lead to losses.

b. Democratic Process Risk: Investment decisions are made collectively. You may be bound by the majority’s decision, even if you personally disagree with an investment.

5. General Investment Risks

a. No Guaranteed Returns: There are NO guaranteed returns. Projections provided by SMEs are estimates and should not be relied upon as promises of future performance. Returns are uncertain and variable.

b. Dilution Risk: In equity investments, your Cooperative’s percentage ownership in an SME may be reduced (diluted) if the company issues more shares in the future.

c. Macroeconomic and Sector Risks: Investments are subject to broader economic conditions, interest rate changes, regulatory shifts, and sector-specific downturns, all of which are beyond the control of the SME or Qalo Ya Afrika.

6. IMPORTANT DECLARATION:

a. By using the Qalo Ya Afrika platform, you acknowledge that you have read, understood and accept the risks associated this Risk Warning Notice.

b. You acknowledge that Qalo Ya Afrika does not provide financial advice and that all investment decisions and due diligence are the sole responsibility of their Cooperative.

c. You confirm they will only contribute funds that you can afford to lose completely without detriment to our financial security.

YOU ARE STRONGLY ADVISED TO CONSULT AN INDEPENDENT FINANCIAL ADVISOR BEFORE MAKING ANY INVESTMENT DECISIONS.

This notice forms part of the Qalo Ya Afrika Platform User Agreement and should be read in conjunction with our full Terms of Use