Limpopo Business 2017-18 edition

OVERVIEW Banking and

OVERVIEW Banking and financial services The provincial government is creating an insurance company. SECTOR INSIGHT New banks will improve access for rural residents • NTK and VKB provide financial services to farmers. Three new banks are set to make their debuts on the South African market. In addition, the Limpopo Provincial Government, through the Limpopo Economic Development Agency, intends to establish a local life insurance company which it expects to start operating in 2017. All of the banks are state-owned entities. The intention behind this (and the provincial insurance) initiative is to make banking more accessible for rural communities and to make finance more readily available to small and micro-sized businesses. Trying to integrate small business into the mainstream economy is a major goal of national and provincial governments in South Africa. Life insurer MMI Holdings is also entering a partnership with African Bank to enable it to start taking deposits and loaning money. It intends to establish a R10-billion loan book. All the new banks come from state enterprises: Ithala, Postbank and Human Settlements Development Bank. The Ithala Development Finance Corporation is an enterprise funder in KwaZulu-Natal that has applied for a banking licence. In 2016, Postbank (part of the South African Post Office, SAPO) received a first-level licence. Once a board of directors has been appointed and a company formed, the Reserve Bank is likely to grant the full licence. The current Postbank focusses on taking deposits and savings accounts. Postbank has secured a R3.7- billion loan to enable it to open its own loan book. Three state entities are merging to create the new Human Settlements Development Bank: the National Housing Finance Corporation, the Housing Loan Fund and the National Urban Reconstruction and Housing Agency. The focus will be on financing housing for poorer households and for large statefunded housing projects. Part of the drive is to integrate cities better and to combat the legacy of the spatial divide that apartheid left behind. Private sector investment will be sought. Limpopo has its own bank, VBS Mutual Bank, which grew out of the Venda Building Society and operates mainly in the northern parts of the province. The Public LIMPOPO BUSINESS 2017/18 78

OVERVIEW Investment Corporation holds 34% of equity. The corporate office is in Johannesburg (which also hosts a branch) and there are four branches in Limpopo, including Thohoyandou. Ubank is owned by a trust that is managed by the Chamber of Mines and the National Union of Mineworkers (NUM). It has about 100 branches and a strong presence in Limpopo because of its focus on the mining sector. Ubank has about half-a-million clients. The two most active agricultural companies in Limpopo are both registered to participate in the financial sector. NTK, a subsidiary of the Free State-based VKB, has access to lending for farmers and insurance products. Afgri offers the same services under the brand Unigro, and it has another service called Gro Capital Financial Services which offers more sophisticated products such as trade finance, foreign exchange and currency and interest rate hedging. For many decades, South Africa had a retail banking Big Four – Standard Bank, Nedbank, Absa/Barclays and First National Bank. All of them have continue to be well represented in the province, but Capitec Bank has now also become a major player in the retail market. Banks are working hard to offer products to the previously unbanked. Nedbank has partnerships with shops such as Boxer Stores and Pick n Pay where customers can have access to financial services in previously unserviced areas and also on all days of the week such as public holidays and Sundays. Nedbank also has Approve-it, which allows customers to accept or reject an Internet transaction by cellphone. Standard Bank’s community-banking initiative offers a low-cost cellphone-banking service. Retailers can act as agents for the bank, even in very remote rural areas. Shops such as Shoprite, Pep and Spar are connected, as are certain spazas. The insurance market has become more varied over time, with a greater variety of products now available to more market segments, including middle-income earners. A typical example of a specific product that is responding to new realities is Old Mutual’s iWYZE medical gap cover, designed to pay the difference between what a medical aid scheme is willing to pay and what the hospital or doctor is charging. ONLINE RESOURCES Insurance South Africa: www.insurance.za.org National Credit Regulator: www.ncr.org.za Office of the Auditor-General of South Africa: www.agsa.co.za Post Bank: www.postbank.co.za Public Investment Corporation: www.pic.gov.za South African Institute for Chartered Accountants: www.saica.co.za 79 LIMPOPO BUSINESS 2017/18