Getting South Africans to the bank

Ray Maota

Left to right – Radio 2000 presenter and event host Thabiso Tema; National Consumer Forum CEO Thami Bolani; civil rights activist and businesswoman Dr Mamphela Ramphele; and Lyndwill Clarke, head of department of consumer education at the Financial Services Board.

Mohale Ralebitso of Old Mutual said the company has taken a responsibility to ensure that there are innovative programmes for different individuals in the financial sector.
(Images: Ray Maota)

• Nkosinathi Msiza
Nedbank: Communications
+27 11 295 5360

The latest Mail & Guardian Critical Thinking Forum – co-hosted by Nedbank and Old Mutual – tackled the challenge of making South Africa’s financial services sector more inclusive, with a focus on pulling in the unbanked market, numbered at 15-million.

Public broadcaster SABC provided the venue at its studios in Auckland Park, Johannesburg, on the evening of 12 November, and the proceedings were broadcast live on its current affairs radio station Radio 2000.

Presenter Thabiso Tema engaged panellists who included civil rights activist and businesswoman Dr Mamphela Ramphele and Ingrid Goodspeed, chief director of financial inclusion and market conduct at the National Treasury.

The financial services industry was represented by Thami Bolani, CEO of the National Consumer Forum (NCF); Mohale Ralebitso, director of marketing communications and corporate affairs at Old Mutual and Lyndwill Clarke, head of department of consumer education at the Financial Services Board.

Targeting the unbanked

According to the 2012 FinMark Trust’s FinScope Consumer Survey, South Africa’s banked population has grown by 1.3-million people to 22.5-million in 2012, from 21.2-million in 2011.

However, the Banking Association of South Africa, an industry body representative of all registered banks in the country, cites a potential annual R12-billion market for the financial services industry in the 15-million people who remain unbanked.

The FinMark Trust was established in 2002 and is run independently, with several trustees in the Southern African region. The organisation’s research focus is on making financial markets accessible to the poor, while also promoting financial inclusion and integration for these masses in the region.

Nedbank’s group executive for marketing, communications and corporate affairs, Thulani Sibeko, said that the need for financial inclusion has become a major consideration in South Africa and other developing countries.

“It’s important that banks continue to innovate, ensuring that we provide a choice of relevant and distinctive products and services – based on client needs.”

Ralebitso echoed these sentiments, asserting that the fundamental need for the market is a strong culture of saving. FinMark puts the number of South Africans who do not save at 67%.

“It’s not only about access and transactional capabilities. It’s also about understanding the need to save,” said Ralebitso.

The root of the problem

Education, said Ramphele, is key to enabling consumers to make good decisions about their finances.

“Financial inclusion is important,” she said, “but we need to look at the root causes of why so many people are unbanked. These are poor levels of education; lack of financial support for students; inequality; and access to finance for entrepreneurs.”

Goodspeed said: “The issue is not that financial institutions do not have financial programmes. Consumers do not absorb the literacy to make it work for them.”

Old Mutual, said Ralebitso, had accepted the responsibility of having to be innovative in its variety of products, as these have to cater for different individuals.

A survey done by the NCF three years ago involving 19 schools across the country revealed that 10% of these institutions operated without computers, while fewer than 10% had functioning labs.

Another find was that most of the teachers at these schools were under financial strain because they had garnishing orders against them incurred mainly through the misuse of credit card facilities.

“We as a consumer group see it as an educational problem,” explained Bolani. “People must be taught how to make financial programmes work for them so that financial inclusion will rise.”

Ramphele said that the state of the nation’s financial inclusion is an indicator of its health.

“Until we as a society stop trying to keep up with the Joneses, we will never come right,” she said, adding that the spending patterns of government departments influence society as a whole, and people’s thought patterns.

“We need a fundamental restructuring of ourselves, to go back to basics where schools have all they need to teach pupils, and teachers are inspired.”

Making financial inclusion work

The panellists agreed that for financial inclusion to be realised, people must be educated more and the financial services sector and government must work together to make this happen.

Neil Hart, MD of the Branson Centre for Entrepreneurship, said: “Legislation also has to be inclusive for emerging entrepreneurs. An average South African business has to deal with legislative hurdles on a daily basis.”

“There are issues of students who leave tertiary already heavily indebted,” said Ramphele. “The government needs to provide an enabling environment for higher quality education to be cheaper.”