Banking and financial services

Agricultural financing is in the spotlight.

Mechanised harvesting equipment. Image: VKB

The Provincial Government of Limpopo is in the process of re-examining the agricultural sector to better use the value chain and to expand agriprocessing in the province. One of the aspects under discussion is the model used in financing the sector and how partnerships are created. Related topics include land availability and access.

The two most active agricultural companies in Limpopo are both registered financial service providers. 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.

South Africa’s four big retail banks (Nedbank, Absa, Standard Bank and First National Bank) have a solid presence in the major towns in the province. Agriculture is an important focus area for banks and so they have established specialised units such as Nedbank Agribusiness. Focus areas for this unit are agronomy (grain, oil seeds, sugar and cotton), livestock (including game farming), horticulture (fruit and vegetables, for example), and secondary agriculture which covers agricultural processing and storage.

The biggest news in South African banking is the issuing of new licences, giving customers more choice. Most of these banks are making banking more accessible and the previously unbanked sector of society should now be in a better position to use banking services.

In 2017 Tyme Digital received a licence to run a bank. By early 2019, TymeBank was available in 500 Pick n Pay and Boxer stores and more than 50 000 customers around South Africa had an account. Tyme stands for Take Your Money Everywhere and refers to the fact that the bank does not have a branch network. The bank is targeting the lower-income segment and promises speedy transaction and approval times.

Second to market among the country’s new banks was Discovery Bank, which officially launched in March 2019. Discovery Bank applies the behavioural model it uses in its health business to reward good financial behaviour.

The revitalised African Bank, which was put under curatorship in 2014 by the Reserve Bank, is making a play

Sector Insight African Bank is offering new and flexible products.

for new customers with an interesting offering that does not rely so much on digital wizardry as on presenting the customer with enhanced banking facilities.

African Bank has created an account that allows up to five additional accounts to be created in the name of the main account. Fees are only charged for drawing cash or at the time of a transaction. There are no monthly fees for any of the accounts which can be either for saving or transactional. Each user has his or her own card and monies can be moved between accounts, ideal for families.

Sanlam has entered two partnerships in the insurance market. African Rainbow Life has launched life-cover policies in the low- and middle-income market, in association with Sanlam and African Rainbow Capital. Sanlam is also in a venture with Capitec. In 2019, Financial Mail quoted Capitec CEO Gerrie Fourie saying that the bank was selling 3 000 funeral policies a day.

The Limpopo Economic Development Agency (LEDA) intends establishing a local life insurance company. These initiatives aim to make banking more accessible for rural communities and to make finance more readily available to small and microsized businesses. Trying to integrate small business into the mainstream economy is a major goal of national and provincial governments in South Africa.

VBS Mutual Bank, one of three mutual banks in South Africa, was placed under curatorship in 2018. The appointed curator was not able to confirm all deposits. In the lead-up to the bank not being able to meet its commitments municipalities had been making deposits to the bank although these violated restrictions put in place by the National Treasury. VBS began life as the Venda Building Society in 1982. The Public Investment Corporation held 34% of equity.

To support entrepreneurial students, the University of Limpopo has set up the Limpopo Student Seed Fund together with the SAB Foundation. Support will be offered to businesses that promise to find solutions to social problems such as unemployment and hunger.

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 strong focus on the mining sector. Ubank has about half-a-million clients.

Banks are actively working to sign up more of the unbanked population. Nedbank has Approve-it™, which allows customers to accept or reject an Internet transaction by cellphone. Nedbank also has partnerships with shops such as Boxer Stores and Pick n Pay where customers can have access to financial services in previously unserviced areas.

Some of Nedbank’s other innovations include Home Loans Online Digital Channel and Market Edge, together with the Nedbank App Suite™. The Keyona Plus account includes funeral cover, a loan facility and a method of transferring money. The Nedbank4me account is tailored to the youth market. ■ Image: African Bank

Online Resources

Financial Sector Conduct Authority: www.fsca.co.za National Credit Regulator: www.ncr.org.za Office of the Auditor-General of South Africa: www.agsa.co.za Public Investment Corporation: www.pic.gov.za South African Institute for Chartered Accountants: www.saica.co.za