433369666-The-Case-for-Investing-in-South-Africa

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FINANCE AND INSURANCE
• The finance and insurance sector, which accounts
for 6.4% of overall GDP, is one of the largest and
fastest growing. It recorded GDP growth of 4.7%
per year over the period 2000 to 2018.
• The sector is well developed and comparable to
those in developed economies. It encompasses
all types of financial intermediation, including
commercial and retail banking, investment
asset management, insurance and pension fund
management activities.
• South Africa has highly developed financial markets
and a well-functioning, strongly regulated financial
industry. The major banks are Standard Bank, Absa
Group, FirstRand, Nedbank and Capitec, some of
which provide commercial, retail and investment
banking services throughout the continent. The
proliferation of technological innovations has led to
an increasing number of players offering valueadding
competing services and products for both
the mainstream and underserviced segments of the
population.
• The insurance segment accounts for around 80%
of total direct premiums generated on the African
continent. Life insurance is dominant, accounting
for 75% of the insurance sector.
SELECT INVESTMENT OPPORTUNITIES IN FINANCE AND
INSURANCE:
• The financial services segment provides significant growth
opportunities, particularly in the lower ends of the consumer market.
Despite a highly concentrated banking industry structure, smaller
banks have been taking advantage of this potential.
• Black economic empowerment legislation continues to drive demand
for private equity funds, creating growth opportunities for investors in
this area.
• Demand for asset management services is growing on the back of
changes in tax legislation and an expanding middle class
• Increasing penetration rates of the non-life insurance sub-sector
and enhanced life densities are expected to drive robust growth in
South Africa’s insurance sector, representing a significant investment
opportunity.
• Insurance solutions such as pay-per-use insurance (for example, on
car insurance), insurance combined with financing (for example, microloans
to purchase solar panels).
• Specialised data provision and data management services.
COMMUNICATIONS
• The communications sector accounts for 1.9% of
GDP and is a key enabler of other business services
sectors in the South African economy. It is also one
of its fastest-growing sectors.
• The sector encompasses telecommunications (key
players being fixed-line operator Telkom, and mobile
ICT companies MTN, Vodacom, Cell C and Telkom),
national postal services (predominantly state-led)
and associated courier activities.
• The liberalisation of the domestic telecommunications
market, particularly due to the Electronic
Communications Act of 2005, facilitated the
proliferation of new entrants and increased
competition in the sector.
• The country’s telecommunications sector is
among the largest on the African continent. It is
also deemed to be one of the most complex and
technologically advanced telecommunications
systems.
• Domestic telecommunications are at the forefront
with respect to the adoption of technological
innovations compared to regional peers, resulting in
the local industry’s growing penetration of regional
markets.
• Saturation of the domestic mobile market and shifts
from voice and SMS to data have created significant
growth opportunities in 4G Long-Term Evolution
(LTE) services.
• Release of high-demand broadband spectrum,
aimed at reducing data costs and encouraging
investment, is imminent.
SELECT INVESTMENT OPPORTUNITIES IN
COMMUNICATIONS:
• Commencement of the spectrum licensing process is
imminent, opening up investment opportunities in the digital
and telecommunications industries. Investment in advanced
telecommunication applications: Internet of Things (IoT) applications
such as telematics and smart devices; inter-device communications
technology.
• Big data tools for reporting and analytics.
• Reselling of global cloud platforms.
• Business franchising opportunities in Voice over Internet Protocol
(VoIP) solutions.
• e-Services across industries (e.g. technology/applications for
e-government and e-health).
• Data centres, LTE-A data-only mobile network play.
• Opportunities for consolidation or investment in fibre internet service
providers (ISPs).
• Frontier ICT technology skills development.