
4 minute read
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