Gauteng Business 2017/18 is the ninth edition of this highly successful annual journal, that has established itself as the premier business and investment guide for the Gauteng province. Special features for 2017/18 include a focus on major new developments in the region’s metros, complemented by detailed overviews of the main economic sectors in South Africa’s most important provincial economy.
OVERVIEW A2X will offer
OVERVIEW A2X will offer secondary listings platform for JSE-listed companies and aims to cut costs for investors. African Rainbow Capital (started by Patrice Motsepe) is an investor in A2X. 4 Africa Exchange (4AX) expects to start trading in the second half of the year. 4AX will focus on companies with market capitalisation of up to R8-billion. Agricultural trading company NWK is a shareholder in this venture. The newcomers all promise to use the latest technology to make trading simpler, quicker and cheaper. Banks No fewer than three new banks are set to make their debuts on the South African market. On top of that, life insurer MMI Holdings is entering a partnership with African Bank to enable it to start taking deposits and loaning money. It intends to create a R10-billion loan book. All the new banks come from state enterprises: Ithala, Postbank and a Human Settlements Development Bank. The Ithala Development Finance Corporation is an enterprise funder in KwaZulu-Natal that has applied for a banking licence. In 2016 Postbank (part of the South African Post Office, SAPO) received a first-level licence. Once a board of directors 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. Three state entities are merging to create the new Human Settlements Development Bank: the National Housing Finance Corporation, the Housing Loan Fund and the National Urban Reconstruction and Housing Agency. The focus will be on financing housing for poorer households and for large state-funded housing projects. Part of the drive is to integrate cities better and to combat the legacy of the spatial divide that apartheid left behind. Private sector investment will be sought. 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 province, but they have recently been joined by Capitec Bank as a major player in the retail market. Banks are working hard to offer products to the previously unbanked. Nedbank has partnerships with shops such as Boxer Stores and Pick n Pay where customers can have access to financial services in previously unserviced areas and also on all days of the week such as public holidays and Sundays. Standard Bank’s community-banking initiative offers a low-cost cellphone-banking service. Retailers can act as agents for the bank, even in very remote rural areas. Shops such as Shoprite, Pep and Spar are connected, as are certain spazas. Merchant banking and investment banking are the most competitive sectors with companies such as BoE Private Clients, Rand Merchant Bank and Investec prominent. Investec, a company which engages with capital markets, private banking and asset management, is dual-listed in Johannesburg and London. The insurance market has become more varied over time, with a greater variety of products now available to more market segments, including middle-income earners. A typical example of a specific product that is responding to new realities is Old Mutual’s iWYZE medical gap cover, designed to pay the difference between what a medical aid scheme is willing to pay and what the hospital or doctor is charging. CONTACT INFO Auditor-General South Africa: www.agsa.co.za Banking Association South Africa: www.banking.org.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 GAUTENG BUSINESS 2017/18 64
Green shoots give hope for growth Research done by Standard Bank’s Commercial Banking division points to some positive medium-term indicators for the provincial economy. South Africa’s national economy is under significant pressure, with the outlook for jobs and growth uncertain, but green shoots in the economic heartland of Gauteng show that a growth rate of close to 2% can be achieved over the next five years. Standard Bank’s Commercial Banking division has conducted extensive research into the sectors and geographic trends in the Gauteng regional economy, providing key insights into major trends that will matter for business activity going forward. It was announced in the February Budget that the South African economy, which grew by an estimated 0.5% in 2016, is expected to grow by 1.3% in 2017 and 2% in 2018 as economic conditions strengthen. But that was before ratings agencies downgraded the country’s sovereign debt to junk, leading to much weaker prospects and cuts in GDP outlooks by many analysts. However, the Standard Bank research – which comes after the downgrades were announced – shows that all sectors in Gauteng are expected to perform well in a forecast period of 2016-21, with the exception of the mining sector (which is anticipated to further contract by -1.4%). “The slowdown in mining-based returns and prospects will continue to bite, but promising results are earmarked to come from remaining sectors of the economy which resonates with anticipated growth projections at a national scale,” 65 GAUTENG BUSINESS 2017/18
