Eastern Cape Business 2017 edition

OVERVIEW Banking and

OVERVIEW Banking and finance Formal banking is expanding its reach into rural areas. SECTOR INSIGHT The renewable energy sector is taking loans to finance new developments. • Nedbank Business Banking has a new headquarters in East London.. News that Postbank (run by the South African Post Office) received a first-level licence in 2016 was well received in the Eastern Cape, a province with a high proportion of people living in rural areas. The Post Office has an unmatched reach, even in remote parts of the country. By taking these services to rural areas, it is hoped that small businesses can be more easily created and given better support where they already exist. National government wants the bank to serve a developmental agenda. Once a board 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. A somewhat informal form of banking (which is popular in rural and urban settings) has the potential for tremendous growth. The stokvel (savings clubs) market is estimated at R44-billion in South Africa and developing products for this market is seen as a possibly lucrative outlet for South African financial services companies. The Eastern Cape will be no exception. With the renewable energy sector being actively pursued in South Africa, a whole new sector in need of funding has opened up for banks, and the Eastern Cape has attracted about a quarter of all new projects in the bidding process by independent power producers. For many decades South Africa had a retail banking Big Four – Standard Bank, Nedbank, Absa/Barclays and First National Bank. All of them have a strong presence in the Eastern Cape, but the big news in the sector since 2001 has been the emergence of Capitec Bank. Based on Capitec’s results for 2015/16, BusinessTech published a chart giving Capitec the fourth most customers, at 7.3-million, just less than Nedbank and slightly more than FNB. Standard Bank (about 11-million) and Absa (about ninemillion) are top of the list. Investment company PSG Group is one of the biggest investors in Capitec and is a majority shareholder in PSG Konsult, a financial services company. Like other companies of its type, PSG Konsult is present in the big Eastern Cape towns, but it also has a presence in regional centres such as Middelburg and Aliwal North. From the Karoo Midlands towns of Graaff-Reinet, Cradock, Adelaide and Somerset East, the firm of Gerber, Botha & Gowar dispenses financial advice across large parts of central South Africa. Standard Bank, which was founded in Port Elizabeth in 1862, EASTERN CAPE BUSINESS 2017 52

OVERVIEW now operates in 32 countries (20 in Africa), has nearly 69 000 employees and assets in the region of -billion. Together with the other banks, consulting companies and other firms in the financial and business services sector, it is responsible of 19.2% of the Eastern Cape’s Gross Domestic Product (GDP, StatsSA). The sector provides employment for 141 000 people. In Port Elizabeth there is a geographic concentration of financial services: the city’s own financial district stretches along a section of Cape Road from Mill Park to Newton Park and includes the Greenacres shop and office complex. Here can be found the offices of PSG Konsult, Liberty Life, Alexander Forbes, Hollard and Momentum. Nedbank Business Banking has its headquarters just one block away from the Greenacres complex. Only AON appear to buck the trend, with offices in Central. Also on Cape Road and in the Greenacres complex is FNB’s regional office, FNB Newton Place. This building houses all of the FirstRand group’s offices, such as Rand Merchant Bank, FNB Private Clients and FNB Online. The agreement that Absa Business Bank (ABB) signed with agricultural company BKB allows farmers to borrow money against their produce. The bank flagged the event as the precursor to a possible future agricultural bank. With ABB’s experience in the agricultural field, and BKB’s access to 19 000 primary producers, the agreement can unlock a considerable amount of investment in the agricultural and agri-processing sector. BKB has a national presence, but its headquarters are in Port Elizabeth. It is active in many spheres and has a strong wool and mohair profile. Absa Business Banking has developed a database where potential service or good suppliers can be identified and verified. The Procurement Portal will include details about black empowerment status and tax clearance. Absa also supplies short-term financing to SMME vendors. Nedbank Business Banking has a new focus on agriculture, with business managers in Port Elizabeth, Humansdorp and East London all supported by agricultural specialists. Nedbank sponsors the Komga Show and the bank has paid out loans to the Humansdorp Co-op which specialises in citrus and dairy products. Nedbank’s new building in East London won the “Development of the Year” award from the Buffalo City chapter of the SA Property Owners’ Association. The offices of Nedbank Business Banking in Bonza Bay Road won praise for the courtyard concept incorporated into the design. ONLINE RESOURCES Alternative Exchange (AltX): www.altx.co.za Auditor-General South Africa: www.agsa.co.za Banking Association South Africa: www.banking.org.za Eastern Cape Development Corporation: www.ecdc.co.za Financial Services Board: www.fsb.co.za Insurance Institute of South Africa: www.iisa.co.za Insurance South Africa: www.insurance.za.org JSE Limited: www.jse.co.za Post Bank: www.postbank.co.za South African Institute for Chartered Accountants: www.saica.co.za South African Reserve Bank: www.resbank.co.za 53 EASTERN CAPE BUSINESS 2017