Banking and finance

New banks are targeting niche markets.

News in 2018 that a mutual bank in Limpopo had been hollowed out by corrupt activities put the spotlight on banking practice in South Africa. Mutual banks do not offer full-service banking but focus rather on encouraging savings and providing benefits to their depositors.

Despite the experience in Limpopo, the appetite for mutual banks is strong, given the nature of the South African market. The Young Women in Business Network (YWBN) intends applying for a mutual bank licence in 2019. Bank Zero will use the mutual model while other new entrants such as Timebank (free transactional accounts) and Discovery Bank (which will apply the behavioural model it uses in its health business to reward good financial behaviour) are introducing innovations.

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. Capitec is rapidly moving towards being part of a Big Five and it announced in 2018 that it would partner with Centriq Life to enter the insurance market.

The established banks have specialists in the province and dedicated 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.

With the renewable energy sector booming in South Africa, a whole new sector in need of project funding has opened up for banks. The Northern Cape has attracted a high percentage of independent power producers which have won the right to build power plants, especially in the solar power sector.

The other new sector is astronomy as represented by the Square Kilometre Array project. This will attract investments, one of the first of which is in education by Absa Bank. The bank has given R4.5-million to Sol Plaatje University to develop the field of Data Science.

The Land and Agricultural Development Bank of South Africa (Land Bank) is a major participant in the Northern Cape financial sector and the Industrial Development Corporation (IDC), as an equity investor in several businesses in strategic sectors, is another important player.

Most agricultural companies in the Northern Cape have financing and services divisions, as one would expect in a province with a strong and varied agricultural sector which exports much of its produce.

GWK has six units within its Corporate Services division and these mostly relate to finance: Finance, Financing, Risk Management, and Financial Agricultural Advice.

In 2017 Senwes and its holding company Senwesbel became the first new stocks to be listed on the country’s new stock exchange, the ZAR X. Upington-based KLK Landbou offers insurance and medical cover while OVK has insurance and financing options.

ONLINE RESOURCES

Association for Savings and Investment South Africa: www.asisa.org.za Chartered Institute for Government Finance, Audit and Risk Officers: www.cigfaro.co.za Financial Services Board: www.fsb.co.za

SECTOR INSIGHT

Sol Plaatje University has received R4.5-million from Absa Bank for Data Science.