Banking
All of South Africa’s major financial institutions are active in Mpumalanga.
• Capitec is making inroads in the banking retail sector.
• Absa’s R267.5-million SME fund was launched in 2010.
Mpumalanga’s citizens have access to a full range of financial products, although these are more readily available in urban than in rural areas. Commercial banking and financial services are reliable and well-developed. More attention is being paid to the previously unbanked and innovative products are being rolled out to cater to this market.
Banking
The South African Reserve Bank is the central bank and regulatory body for the banking sector. It sets monetary policy and decides on domestic interest rates.
Merchant banking and investment banking are the most competitive sectors within banking in the country and several international banks have a presence in South Africa. Retail banking, on the other hand, has for many years been dominated by the Big Four – Standard Bank, Nedbank, Absa and First National Bank.
Competition is stiff in developing new strategies to incorporate the emerging second economy and the rural, still unbanked communities. These new banking means and methods are developing the sector, and giving it a new flexibility.
Cellphone and Internet banking services are increasingly being rolled out to South Africa’s previously unbanked population. In 2008, FNB invested R55-million in 500 new ATMs around South Africa, in both rural and urban areas. These additions expand FNB’s ATM network to 5 400 machines, servicing a customer base of more than six million people across the country.
Focusing on the newly banked and smaller towns in rural areas has paid dividends for relative newcomer Capitec. In March 2010 the bank announced a profit for the year to February of R435-million, an increase of 45% over the previous year’s results. With the number of people banking with Capitec also increasing by a significant amount, 37% to 2.1-million, it is clear that Capitec’s foray into retail banking, after initially concentrating on small loans, is reaping rewards. Capitec has 40 branches in Mpumalanga and 400 nationally. This is still some way short of giants such as Absa, which has about 800 branches, but represents a large increase. It opened 38 new branches in 2009 and 50 more are planned for 2010.
Nedbank has a decentralised business model that allows for three area offices in Mpumalanga. The Nedbank Business Banking division aims in this way to get a better insight into local conditions. The bank has developed specific products to support businesses in the tourism sector, particularly relevant in 2010, the year of the Soccer World Cup.
Six of Nedbank’s regional offices are in Mpumalanga and it has 25 branches and 55 ATMs in more than 20 towns. The bank’s reach into rural areas has been enhanced by its branch-in-a-box concept and its Business Banking division remains strong. FNB has several portable branches servicing rural areas. Standard Bank and Absa both have more than 50 branches in the province.
Community involvement
Absa’s national initiative to support small businesses in conjunction with national government, the SME Fund, was unveiled in 2010. National funding is in the amount of R267.5-million, with six of the country’s nine provinces having access to approximately R50-million each to support entrepreneurs who would otherwise not have access to funding.
The fund is driven by the Small Business division of Absa and is targeted at companies that are 100% black-owned, need bridging finance to execute government tenders and do not have the amount of security normally required to support an application for finance.
Insurance
A R30-billion deal announced in March 2010 reshaped South Africa’s life assurance landscape. Metropolitan (valued at R12-billion) merged with Momentum (R18-billion) to form South Africa’s third biggest life assurance company after Old Mutual and Sanlam. Each company had somewhat different strengths and markets so the merger creates a stronger unit with a significant presence on the African continent.
In its 2008 Financial Stability Review, the SARB found that South Africa’s long-term insurers remained sound, despite the bad effects of the global economic downturn. Nearly 70% of institutions providing long-term cover had assets-to-capital ratios that were well above minimum requirements. The Association for Savings and Investment South Africa stated in late 2009 that South Africa’s strict controls had helped the country’s financial sector weather the global economic downturn relatively well.
Santam, South Africa’s biggest short-term insurer, reported that 2009 was a bad year for fires and floods, with unusually high rainfall recorded in the northern parts of the country between June and December.
Online resources
Actuarial Society of South Africa: www.assa.org.za
Auditor-General of South Africa: www.agsa.co.za
Banking Association of South Africa: www.banking.org.za
Financial Services Board: www.fsb.co.za
South African Insurance Association: www.saia.co.za
South African Reserve Bank: www.resbank.co.za
