South African Business 2017 edition

OVERVIEW
bank). Capitec had 3.3-million clients
at the same time and 11 000
employees.
The banking sector could
soon be welcoming another newcomer:
the Discovery group has
indicated that it will be applying
for a licence. Discovery is already
a giant on the JSE (market value of
R83-billion) with a wide range of
products and services (health insurance,
credit cards, investment
portfolios) that gives it access to
millions of customers.
Further change in the sector
relates to Absa's British investor,
Barclays, which has indicated
its intention to sell its stake in
African operations. Financial
services group Old Mutual (54%
stakeholder in Nedbank) has announced
its plan to create four
stand-alone businesses out of the
Old Mutual Group. This would allow
the UK-based wealth management
business and the New
York-based asset managers to
be free of linkages to the rand,
while the South African businesses,
Nedbank and Old Mutual
Emerging Markets, could focus on
their specialities. In its six-month
report for the period ending 30
June 2016, Old Mutual Emerging
Markets reported that it had
11-million customers and had
paid out R9.2-billion in retirement
benefits and matured savings
policies in that period.
Standard, which operates
as Standard Bank or Stanbic in
17 African countries outside
South Africa, is Africa’s largest
corporation. Banks such
as the Development Bank of
Southern Africa and the Land and
Agricultural Development Bank
of South Africa focus their loans on support for infrastructure and
developmental projects.
Access
South Africa is an ideal stepping stone into Africa and several international
concerns have set up head offices, primarily in Johannesburg.
These include Bank of China, Bank of Taiwan, Citibank, Deutsche Bank
AG and HSBC Bank.
A small number of firms handle most of the country’s biggest
auditing accounts. The big four are Deloitte, Ernst & Young, PwC and
KPMG, with SekelaXabiso also in the running thanks to the award by
Transnet of a R1.3-billion account.
With the renewable energy sector being actively pursued in South
Africa, a whole new sector in need of funding has opened up. One
example in the province of KwaZulu-Natal is the creation by Investec
and the European Investment Bank of a renewable-energy fund of
€100-million, which will create many options for investors.
Despite the incredible strides that have been made in providing
banking services to the previously unbanked, there is still a long way
to go. MasterCard has pointed out that only 2% of retail transactions
on the continent of Africa are conducted electronically. The consulting
firm McKinsey puts the figure for Africa's population not connected
to formal banking at close to 80%: this presents an opportunity for
South African banks in Africa. South Africa has the highest connection
rate in Africa.
Finscope's 2014 survey of South African banking and financial surveys
shows that between 2004 and 2014 a remarkable eight-million
people were connected to the financial system in some way. Overall,
the "financially included" reached 31.4 million (up from 17.7-million in
2004). In a category called "formally served" which includes services
other than formal banks with branch networks, the percentage of
South Africans so served grew from 50% to 80%; in the "banked" category
(more traditional but including new devices), the percentage
grew from 46% to 75%.
The stokvel (savings clubs) market is estimated at R44-billion and
developing products for this market could be a lucrative outlet for
South African financial services companies.
ONLINE RESOURCES
Banking Association South Africa: www.banking.org.za
Financial Services Board: www.fsb.co.za
JSE Limited: www.jse.co.za
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SOUTH AFRICAN BUSINESS 2017