Financial Sector Overview

Challenges and Progress: Navigating Transformation and Empowerment

By Raine St.Claire

In order for an economy to remain stable, it needs to have a healthy financial sector which is made up of many different industries ranging from banks, investment houses, insurance companies, real estate brokers and consumer finance companies. Of these, banks, insurance companies and asset managers are particularly prone to scrutiny due to their crucial role in financing the real economy and large workforces.

Banks employ over 100,000 people and while these large companies dominate the sector, smaller companies contribute significantly to the sector’s viability.

Financial Sector Scorecards

• 10 000 registered companies

• 1076 included(up from 759 last year)

• Recognition: Up to Level 2 from Level 4

• ESD: Up from 71%

• Skills development Down to 78%

• Ownership: Up from 81% to 91.29%

• Management: Remains at 61%

Statistics

According to 2023 Q2 labour statistics the finance sector (banking, financial intermediation, insurance, real estate, and business services):

• Employs a total of 2 599 000 people

• > 1 132 000 women

• > 1 467 000 men

• Compared to 2022 Q2 — an increase of 139 000 people across the sector

The Biggest Banks in South Africa in 2023 By Assets

#1 Standard Bank

• Assets R3.12-billion

• Employees 49 931

• Top employer ranking #20

• BBBEE Level 1 Score: 120.08

# 2 FNB

• Assets 1.72-billion

• Employees 38 836

• Top South African Employer ranking #2

• BBBEE Level 1 Score: 120.81

#3 ABSA

• Assets R1.60-billion

• Employees 26 000

• Top South African Employer ranking #1

• BBBEE Level 1 Score: 120.00

#4 Nedbank

• Assets R1.35-billion

• Employees 25 924

• Top South African Employer ranking #4

• BBBEE Level 1 Score: 122.44

#5 Investec

• Assets R610-billion

• Employees 8 705

• Top South African Employer ranking #5

• BBBEE Level 2 Score: 95.04

#6 Capitec

• Assets R609-billion

• Employees 15 451

• Top South African Employer ranking #8

• BBBEE Level 2 Score: 104.71

#7 Discovery

• Assets R74-billion

• Employees 13 700

• Employer ranking #16

• BBBEE Level 1 Score: 110.53

Real Estate

South Africa’s property industry remains among the least transformed industries. Fewer than 10% of registered real estate agents are black, and the BEE scorecards of many property companies indicate that key areas like ownership and management control, crucial for genuine empowerment, still lack transformation.

The figures show improvement in some areas and challenges in others:

• Recognition level: Improved from level 5 to level 4

• ESD: Up from 62% to 85%

• Skills development: Up from 67% to 80%

• Ownership: Slightly down at 65%

• Management control: Slightly down at 32%

• Socio economic development: Fell sharply but remains well above target at 116%

Insurance Industry: South Africa Leads The African Insurance Market With Health Coverage Dominance Market Leaders

1. Old Mutual Life

• Turnover $6668-million

• Net Profit $459-million

• 30 000 employees

• BBBEE Level 1 Score 121.10

2. Sanlam

• Turnover $4353-million

• Net Profit $782-million

• 120 105 employees

• BBBEE Level 1 Score 122.46

3 . Discovery Health

• Turnover $3866-million

• Net Profit $88-million

• 13 700 employees

• BBBEE Level 1 score: 110.53

4. Momentum Metropolitan Holdings

• Turnover $3514-million

• Net Profit $224-million

• 120 105 employees

• BBBEE Level 1 Score 117.99

5. Santam

• Turnover $2923-million

• Net Profit $123-million

• 6 339 employees

• BBBEE Level 1 Score: 114.90

6. Liberty Holdings

• Turnover $2856-million

• Net Profit $71-million

• 7080 employees

• BBBEE Level 2 Score 99.04

Conclusion

The financial sector is confronted with persistent challenges, including the need to reduce monopoly levels, dismantle entry barriers for emerging black businesses, and address issues of financial exclusion.

Achieving level 2 recognition in this year’s 2023 Sanlam Gauge Report, supported by independent research from The Association for Savings and Investment South Africa (ASISA) – a significant contributor to the financial sector managing about R8-trillion in assets – provides clear evidence of transformation.

In an effort to empower the Financial Services Conduct Authority (FSCA) in enforcing B-BBEE legislation, the Conduct of Financial Institutions (COFI) Bill was introduced in 2022. Despite its publication, the bill, outlining a transformation strategy, is yet to be passed. While addressing skills shortages requires long-term interventions, there is significant improvement in scorecard performances, surpassing targets in both ESD and SED – a positive sign indeed!

Sources: StatsSa | National Treasury | Property Wheel | Business Tech African Business | The Reserve Bank The Africa Report | Global ranking The Banker