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Mpumalanga Business 2017 edition

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Mpumalanga Business 2017 is the seventh edition of this highly successful publication that has since its launch in 2008 established itself as the premier business and investment guide to Mpumalanga Province. Supported and utilised by the Mpumalanga Economic Growth Agency (MEGA), Mpumalanga Business is unique as a business journal that focuses exclusively on Mpumalanga.

OVERVIEW Banking and

OVERVIEW Banking and financial services The Post Office bank will soon be offering loans. SECTOR INSIGHT The stokvel market is worth R44-billion. • Nedbank hosts a series of small business seminars. In a province with a high proportion of rural citizens such as Mpumalanga, the prospect of Postbank being upgraded to a fullservice bank is positive news. In 2016, the bank (part of the South African Post Office, SAPO) received a first-level licence. Once a board has been appointed and a company formed, the Reserve Bank is likely to grant the full licence. The current Postbank focuses on taking deposits and savings accounts. Postbank has secured a R3.7-billion loan to enable it to open its own loan book. The large geographical footprint of the Post Office will make the bank easily accessible to even remote parts of the country. National government wants the bank to serve a developmental agenda. Finscope’s 2014 survey of South African banking and financial surveys shows that between 2004 and 2014, a remarkable eight-million people were connected to the financial system in some way. Overall, the “financially included” reached 31.4-million (up from 17.7-million in 2004). In a category called “formally served”, which includes services other than formal banks with branch networks, the percentage of South Africans so served grew from 50% to 80%; in the “banked” category (more traditional but including new devices), the percentage grew from 46% to 75%. Although cellphone banking has not been a great successs in South Africa (partly because the formal infrastructure is so good), banks and cellphone companies continue to cooperate. Vodacom and Bidvest are working on the mobile money M-Pesa scheme, Standard Bank and MTN collaborate on mobile banking and there have been recent moves linking Old Mutual and Telkom, and Sanlam and African Bank. Sifiso Skenjana has noted in the Sunday Times that African Bank has 400 branches and 150 000 people per month going through these branches, so this represents a huge potential market for a financial services company. Telkom is hoping that the link-up with Old Mutual will prove attractive to customers wanting funeral insurance. Skenjana also points out that South Africa has a “stokvel” (savings club) market valued at R44- billion: Sanlam is developing products to tap into that market. Among other recent innovations designed to reach the unbanked were Teba Bank allowing customers to deposit at supermarkets, Pick n Pay Go Banking (a division of Nedbank), the fact that 70% of Absa’s new ATMs (400 in one year) were placed in poorer areas and that Absa launched two mobile banks, FNB also created mobile branches and most of Standard Bank’s new sites were planned for townships. (Finscope). MPUMALANGA BUSINESS 2017 76

OVERVIEW Absa’s partnership with Thumbzup allows shops to accept card payments with smartphones and tablets. Effectively, phones become terminals. Absa’s Entry Level and Inclusive Banking (Elib) branches have proved popular, accounting for an increasingly high percentage of the bank’s loans, despite still representing quite a small number of actual branches. Nedbank has deployed stateof-the-art- technology in its new branches in an initiative called “Branch of the Future”. FNB has a wide range of cellphone-banking options and a Facebook application whereby cellphone vouchers can be posted on the social-networking site. The eWallet application converts the voucher into cash or airtime. Standard Bank’s communitybanking initiative offers a lowcost cellphone-banking service. Retailers can act as agents for the bank, even in remote rural areas. Shops such as Shoprite, Pep and Spar are connected, as are certain spazas. Sectors With agriculture being such an important part of the Mpumalanga economy, each of the Big Four banks has specialists in the province and dedicated units. Another source of funding for farmers is the Land and Agricultural Development Bank of South Africa (Land Bank), a developmentfinance institution that falls under the Ministry of Finance. Standard Bank has a black economic empowerment agricultural fund designed to support emerging farmers. The R500-million fund is designed to connect farmers who have received farms in land reform projects to agri-businesses that will buy their produce. The Masisizane Fund (Nedbank) makes loan financing available in sectors such as agriculture and agri-processing), commercial, supply chain and manufacturing. It also offers training and technical support and funding to help businesses to comply with legislation. The Vumela Enterprise Development Fund of First National Bank is available to small businesses. FirstRand has put R186-million into the fund and to date it has invested R50-million in small businesses that have shown potential for growth. Financial literacy is an important part of the requirements for running a business, an issue that a joint project of Absa and the Mpumalanga Enterprise Development Organisation (MEDO) is addressing. Another area where banks are growing new markets is in affordable housing. Absa Property Development (Absa DevCo) has entered a partnership with municipal, provincial and national government to help provide mixed housing in the R1.6-billion Klarinet Ridge project in the eMalahleni Municipality. The lead agency is the National Department of Human Settlements. Housing options range from subsidised housing, rental and sectional-title flats and bonded homes. The intention is that a sustainable community with relevant amenities be created, rather than a sterile development comprising only “matchbox” houses. Absa DevCo is backed by private investments and is a joint landowner and the project’s developer. The four major national retail banks (Absa, Standard Bank, First National Bank and Nedbank) are well represented in Mpumalanga, with branches in all major towns and cities and extensive ATM networks reaching far into the rural areas. Relative newcomer Capitec Bank is rapidly closing in on the Big Four, as its growth from 43 branches in 2011 to 62 in 2016 shows. ONLINE RESOURCES Auditor-General of South Africa: www.agsa.co.za Banking Association South Africa: www.banking.org.za Financial Services Board: www.fsb.co.za Institute of Bankers in South Africa: www.iob.co.za Insurance Institute of South Africa: www.iisa.co.za The Land and Agricultural Development Bank of South Africa: www.landbank.co.za Office of the Ombudsman for Banking Services: www.obssa.co.za Post Bank: www.postbank.co.za Public Investment Corporation: www.pic.gov.za South African Reserve Bank: www.resbank.co.za 77 MPUMALANGA BUSINESS 2017

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