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South Africa: Committed to an Inclusive Financial Sector

1. Summary:

The advent of democracy in 1994 has accelerated efforts to include all segments of the population in the development process. The Financial sector actively engaged on the Black Economic Empowerment agenda and signed a transformational voluntary Charter in 2004. The Charter commits to specific and ambitious financial inclusion targets to be met by 2008. Policy makers have actively supported this market-based approach to financial sector development and use the newly constituted Financial Sector Charter Council to track progress relative to stated targets. Arising out of Charter process, the banking sector has introduced an easy-to-use and affordable basic bank account (Mzansi), which currently reaches over two million customers, 60% of whom are first-time banking users. The policy makers are finalising legislative changes to enable Tier 2 and Tier 3 institutions (Co-operatives and Savings and Loan Banks) to expand access. The National Credit Act has been promulgated to tackle predatory lending and provide protection to consumers. Public-private partnerships are being used to rapidly expand disbursement of social grants through banks. FinMark as an independent trust has 17 52% supported this process by 16 developing tools, providing 50% 15 market research data and 14 48% commissioning analyses of 13 the potential impact of 12 46% 11 proposed legislative 10 44% changes on access. 2003 (18+) 2004 (16+) 2005 (16+) 2006 (16+) FinMark conducts an annual, nationally number banked % banked representative financial Source: Finscope 2003-06 survey (FinScope) that tracks the number and proportion of adults who use financial services in South Africa. According to this survey 51% of adults (aged 16 or more) currently make use of banking services (Figure 1). 67% of adults, termed the financially served, make use of at least one financial product, be it a bank account, another formal product (such as formal insurance or credit) or an informal product (such as a stokvel, an informal savings association in which members contribute regularly and receive payouts in rotation). However, 33% of adults remain financially excluded in South Africa.
Figure 1: Number and % of Banked in South Africa This paper was prepared by Sukhwinder Arora based on extensive analysis undertaken by FinMark Trust, South Africa and other sources listed at the end of the paper. Jeremy Leach and other FinMark colleagues have provided valuable support. This paper was commissioned by Financial Sector Team, DFID as background material for the DFID and HM Treasury Financial Inclusion Conference, London (19 June 2007) and does not constitute official DFID views or policy.
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South Africa: Committed to an Inclusive Financial Sector

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Since 1994 over 2 million houses have been constructed under the Reconstruction and Development Programme. the key stakeholders in the financial sector debated these issues and voluntarily signed a historic Charter. 69% of households in South Africa now have at least one cell phone compared to 22. Background South Africa has one of the most unequal1 income distributions in the world. Over the period 1993 to 2004. Within the private sector. The advent of democracy in 1994 has accelerated efforts to include all segments of the population in the development process. However there were complex issues of prioritisation and sequencing as well as important debates about the role of the State and markets. In many sectors. the Government established Black Economic Empowerment (BEE) regulations to reduce unequal access to economic opportunity in the post-apartheid era and invested significantly to increase access to basic services. Financially Excluded 33% Source: World Development Indicators 2006.7% 2000-05 Population below the 11% population below $1/day poverty line 34% population below $2/day Domestic Credit to the 144% of GDP in 2005 private sector 81% of GDP in 1990 Bank Branches 6 per 100. Should the State play a more activist (coercive) role or mainly guide and facilitate the already well-developed private sector? During 2002-03.000 people people (2005) Formally Included 57% adult population has access to financial products supplied by legally governed institutions (50% formal banks and 7% others) Informally served 9% adult population is served by informal arrangements such as burial society or smaller savings clubs. The proportion of households using electricity for lighting increased from 52% to 80% while the proportion of households with access to piped water increased from 59% to 68%2. online. The financial sector acknowledged that access to first-order retail financial services is fundamental to BEE and to the development of the economy as a whole. a significant number of households joined the national grid.22 million km2 GDP (average annual 2.Table 1: Key Country Data Population 47 million GDP $ 240 Billion Land Area 1.000 Phones 825 Per 1.5% 1995-2000 growth) 3. the cell phone industry which emerged in 1994 has had a significant impact. South Africa has Ginni co-efficient of 58 in 2000 as compared to Kenya 42 (1997) and India 37 (2004) 2 Shifts in Non-Income Welfare in South Africa: 1993-2004. Carlene van der Westhuizen Development Policy Research Unit May 2006 Working Paper 3 Source: AMPS 2006 RA 1 South Africa: Committed to an Inclusive Financial Sector 2 . Finscope Data 2006 2. Haroon Bhorat. Pranushka Naidoo.5% who have a land line3.

investment managers. Provide the basis for the sector’s engagement with other stakeholders Establish targets and responsibilities in respect of each principle. BEE is a mechanism aimed at addressing inequalities and mobilising the energy of all South Africans. and contributes to the establishment of an equitable society by effectively providing accessible financial services to black (ie previously disadvantaged) people and by directing investment into targeted sectors of the economy'. vibrant. Financial institutions affected by the Charter include banks. It will contribute towards sustained economic growth. business. This is not only unjust. promote its global competitiveness. and globally competitive financial sector that reflects the demographics of South Africa. They noted that: • “Despite significant progress since the establishment of a democratic government in 1994. The transformational Charter is effective from January 2004. development and social transformation in South Africa. Equally. labour and community representatives committed themselves to the development of a BEE Charter in the financial sector. and Outline processes for implementing the Charter and mechanisms to monitor and report on progress. retirement funds. short -term insurers. A positive and proactive response from the (financial) sector through the implementation of BEE will further unlock the sector’s potential. but inhibits the country’s ability to achieve its full economic potential. 4. South African society remains characterised by racially based income and social services inequalities. An 18% weighting has been placed on access to financial services (the focus of this 3 South Africa: Committed to an Inclusive Financial Sector . Other financial sector institutions may also opt to participate in the Charter. and enhance its world class status. long -term insurers.3. collective investment schemes. The Charter has committed its participants to 'actively promoting a transformed. and licensed exchanges. re-insurers. Financial Sector Charter Commitments and Monitoring The Charter confirms specific commitments in the financial sector. • • • The objectives of the Charter are to: • • • • Constitute a framework and establish the principles upon which BEE will be implemented in the financial sector. the financial stability and soundness of the financial sector and its capacity to facilitate domestic and international commerce is central to the successful implementation of BEE”. Financial Sector Charter In August 2002. government.

and includes ATM and other origination points.paper)4. 14% rely upon child grants. those in LSM 1-5 constitute 63% of the adult population and have an average monthly household income of R 1.life insurance. For example ‘first order transaction products and services’ is defined as enabling a basic and secure means of accessing and transferring cash for day-to-day purposes while ‘Insurance products and services’ has been defined as basic risk mitigation products . The access targets relate to the population in Living Standard Measure5 (“LSM”) groups 1 to 5. 10% on old age pensions.000 have effective access to formal collective investment savings products and services. each financial institution will have a target of a minimum of 25% black ownership by 2010. The Financial Sector Charter Council has been constituted and is responsible for overseeing the implementation of the Charter between 2004 and 2014. each financial institution will have a minimum target of 20% to 25% black people at senior management level by 2008. except in the case of the products and services of the long term assurance industry. now reduced to 15 Kms. 7% of the adults in LSM 1-5 report loss of the main wage earner in their households in the last year. 4 Other Charter commitments include Human resource development (based on an estimated ratio of 10% for 2002. By end of year 2008. 6 This average excludes 19% of respondents who do not provide household income data 7 Initially 20 kms. 27% have flush toilets but only 3% have access to hot running water.za/ 5 Consumer durable ownership is taken as a proxy for wealth and income for LSM categorisation. o 80% of LSM 1-5 households have effective access to life assurance industry products and services (22% usage for long term insurance). the financial sector Charter commits to ensure that: o 80% of LSM 1-5 have effective access to transaction products and services. Within the LSM 1-5 adult population. To put this in context. ‘Effective access’ means being within a distance of 15 Kilometres7 of the nearest service point at which first-order retail financial services can be undertaken. funeral insurance. household insurance and health insurance. South Africa: Committed to an Inclusive Financial Sector 4 . 33% black people on the board of directors by 2008). Ownership and control (for example. Each of these terms has been defined in the Charter. full details at http://www. 1% on disability grants and 4% on other types of state grants.7006 (less than £ 121).fsCharter. The 2005 Annual Review concluded that the financial sector performed reasonably against the targets set by the Charter and that it is in a position to achieve the cumulative investment and funding targets set for achievement by the end of 2008. o 80% of LSM 1-5 have effective access to bank savings products and services. It will conduct reviews in 2009 and 2015 to assess achievements and document the impact on financial sector transformation. o 1% of LSM 1-5 plus 250. and o 6% of LSM 1-5 have effective access to short term risk insurance products and services. 77% of this market has electricity in their homes.co. measured at holding company level.

There is no other credible source of indicators. new products are based on Finscope data. FinMark trust analysed key drivers and constraints in improving access to financial services and supplemented this with the launch of a nationally representative consumer perception study (FinScope – box 1 provides more details). In 2003. These ratings will be considered by all State institutions when they conduct business with the sector. The FinMark Trust was initially active in Southern Africa. South Africa: Committed to an Inclusive Financial Sector 5 . the Banking Association ‘Finscope data were a critical input into the work the banks did to design the Mzansi account’. and to derive access indicators. Executive Director. Every politician borrows from Finscope. Standard Bank’s self-assessment records progress made against Charter targets and is presented in annexure 1.org. Role of FinMark Trust FinMark Trust is a Johannesburg based independent trust committed to “Making financial markets work for the poor.’ Enoch Godongwana. Executive Director.finmarktrust. This study provides national data on the formally included. we use it for policy.’ Cas Coovadia. which covers most of the sectors we deal with. informally served and financially excluded markets (presented at the beginning of this paper). The following feedback to a recent DFID review team captures the nature and extent of FinMark’s contribution in South Africa. the Financial Sector Charter Council ‘FinMark is critical in shaping the debate about access to financial services – they do it via FinScope. Banking Development and Financial Access.From 2007 performance by individual institutions will be rated. Independent reviews have highlighted the substantial impact FinMark Trust has had on access debate in South Africa and at a global level. thereby providing an incentive for financial institutions to transform and promote broad-based black economic empowerment. and comes out every year. National Treasury ‘The definition of financial inclusion comes from FinMark – they are the only credible source. When the National Credit Regulator set new interest-rate caps – the decisions were based on indicators taken from Finscope. Nkosana Mashiya: Chief Director.za).” DFID has provided core funding support since its inception in 2002. Set up at a time when the Black empowerment agenda was forcing attention on financial inclusion. We use it to track progress on access issues. FinMark’s commissioned research to assess the potential impact of proposed legislative changes on access has contributed to the national debate. 5. in the business community. In National Treasury. but is now scaling up its activities elsewhere in Africa. FinMark trust has emerged as an influential catalyst by generating independent and high quality market research and discussions papers and by facilitating informed dialogue (material available at www. Banks have started preparing their own assessment of performance against commitments.

An average household portfolio. 2004. households used 17 different financial instruments over the course of a year. including South African government departments. they actively manage what they have. Less frequent repeat surveys can be considered but the private sector is funding repeat annual surveys for valuable information on customer behaviour. researchers and civil society to confirm progress.transaction banking. Contrary to the study team’s expectations. imaginative communication and involvement of the private and public sector in designing surveys and analysing results were some of the factors identified while praising the methodology. The study is also valuable to regulators. National Treasury. Metropolitan. The aim is to establish credible benchmarks and highlight opportunities for innovation in product and service delivery. Zambia. FinScope surveys have also been undertaken in Botswana. Sanlam. FinScope collates consumer preferences and behaviour to track the changing landscape of access to financial services across all the main product categories . 2 insurance instruments and 11 credit instruments. after conducting a year-long intensive household research process with 166 poor households concluded that while poor households have little money. It was piloted in 2002 with 1. Starting with South Africa. The Ford Foundation and the Microfinance Regulatory Council.000 households in urban areas. The findings of the study assist private sector managers to remove or reduce the barriers and to update or create their market offerings. The 2006 South African syndicate members are: Absa. More details at http://www. Standard Bank and Teba Bank. The latest survey covers 3. This identifies those who use various financial 8 The project was funded by FinMark Trust. UN. Old Mutual. The pilot was followed by full scale national surveys in 2003. First National Bank. Uganda and Kenya (called FinAccess) and are being undertaken in Ghana.financialdiaries. would use 4 savings instruments. Financial Services Board. with about 30% formal and 70% informal financial instruments. Nedbank.900 representative households across different income and financial usage categories to capture national trends. rural households used just as many financial instruments as urban households.com 6. analyse trends and to trigger needed changes. FinScope survey results provided a valuable input in the international agreement on headline indicators in 2005. Access to financial services in South Africa The Financial Diaries project8. World Bank and DFID committed to generate key data to track progress in access to financial services across countries and over time. Technical competence and rigour. credit and insurance. Nigeria and Pakistan with plans for Mozambique in process. based on all 166 households. FinScope South Africa was initially funded by the FinMark Trust with subsequent surveys undertaken through syndication with financial service providers and other interested organisations. An external impact assessment study highlighted what distinguishes FinScope from other surveys.Box 1: FinScope FinScope is a comprehensive national household survey of financial services needs and usage amongst consumers. The survey highlights the barriers poor people experience in accessing financial services. market segmentation and to track progress against the Charter. Extensive analysis and national data from the FinScope surveys (for various years) are now available. Namibia. savings. Liberty Life. More at www. On average.com South Africa: Committed to an Inclusive Financial Sector 6 . 2005 and 2006.finscopeafrica. Tanzania.

This proportion of financially excluded increases as we go further down the LSM groupings (56% in LSM 1 – 2) 50% of the LSM 1-5 adults say that they can live without a bank account. loss of earning insurance.6% in 2005 to 51% in 2006 (Figure 1 on page 1). • • • • • • • LSM 1-5 Population • • 35% of adults in LSM 1-5 were banked in 2006 as compared to 32% in 2005. currently use bank accounts. Over 67% population is using financial services. 3. an administrator or an employer.3 to 15.9 million (11% increase) This includes funeral insurance from an insurance company. 33% of adults are currently financially excluded in South Africa. a bank. a retailer. 9% of adults in LSM 1-5 currently use long term insurance (life insurance. 58% of the adults are formally included. formal funeral cover10. This means that banking sector has reached 1. The proportion of Black adults accessing banking has gone up from 40% in 2005 to 45% in 2006. 50% of women as against 52% men had a bank account. Women have significantly narrowed the gap with men on formal product usage. With 51% banked and another 7% accessing other formal providers. • • • 9 10 from 14. Less than 1% of the population currently use short term insurance (asset insurance. and retirement cover) as against 2008 targets of 22% usage and 80% access.58 million (i. In 2006. 35% of adults earning between R1 and R 499 (£ 36) per month and 38% of those earning between R 500-R 999 (£ 36-72). travel insurance and credit insurance) as against 2008 targets of 6% usage. those who are not included and reasons for exclusion.services.27 million currently unbanked) previously used banking services but no longer do so. This percentage rises sharply to 74% for those earning between R1000-R1999 (£ 72-143) a month. If undertakers or funeral parlours are included the percentage increases to 17% South Africa: Committed to an Inclusive Financial Sector 7 .e 23% of the 15. 44% of those in LSM 1 – 5 do not have access to any formal or informal financial products. a broker. The corresponding percentages for 2005 were 44% for women as against 50% for men. including 9% being served exclusively by informal providers. Some key findings from FinScope are noted below: Overall Population • There appears to have been a rapid expansion of banked adults (16+) from 46.6 million additional9 adults in one year.

especially in remote rural areas • Monitor cost and appropriateness of financial services 4. The table below provides examples of actions being taken to support financial inclusion in South Africa. • Provide financial literacy and debt counselling. Table 2: Stakeholders’ actions to enhance financial inclusion Stakeholder Examples of actions to support Financial Inclusion 1. What is being done? The 1993 mission statement of the Policy Board for Financial Services and Regulation articulated the vision for financial inclusion “The Board wishes to promote and maintain a safe and sound financial system which will be fair to investors and effective in supplying financial services to all”.6 million additional adults access banking during 2005-06 Microfinance • Product Innovation (see box 2) and use of technology (box 3) to and other reduce costs and improve distribution. • 1. Donors and • Supporting innovative models of financial services such as mobile International banking Financial • DFID support to FinMark Trust Institutions • IFC SME initiatives • Focus on market research such as Financial Diaries Project • Focus on transparency in remittances and financial services Recognising that different types of formal providers are needed and mainstream banks have limitations in serving large number of marginal customers. The bill provided for savings and savings and loans banks with much lower capital requirement South Africa: Committed to an Inclusive Financial Sector 8 . a co-operative banking bill has just been introduced in parliament. inflation Government/ and currency fluctuations. The 2003 financial Charter provides the specific commitments for an inclusive financial sector. financial • Rapid Expansion of products and distributions points institutions • Assessment and reporting against Charter commitments (Annex 1) • Fund and steer the annual FinScope survey • Public / private participation in social grant payments 3. Policy Makers • Prioritising financial inclusion (National • Macro-economic management to control interest rates. • The National Credit Act (2005) and Regulations (2006) to tackle predatory lending and consumer abuses • Finalising legislative changes to enable Tier 2 and 3 institutions to enter and expand access (Dedicated bill elements to be incorporated into Banks Act amendments.7. Civil Society • Actively participate in the discussions on Financial Sector Charter. • Participation in the FinScope survey. Banks. A dedicated banks bill was drafted in November 2004. The Charter was gazetted in 2004 and is being monitored by the Financial Sector Charter Council. regulatory changes and in interpretation of results. South African • Continued reliance on market based Financial Sector Reserve Bank) Development through the Financial Sector Charter. Recent introduction of Co-operative Bill in parliament) • Competition enquiry regarding retail banking and national payment systems • Proposed micro-insurance discussion paper and focus on insurance industry re disclosure and unfair charges • Participation in the FinScope survey 2.

In its primary target market of LSM 1 – 5. South Africa: Committed to an Inclusive Financial Sector 9 . they have considered opening one. Mzansi account has achieved its aim of positioning itself as “a product for all South Africans”. This increased to 12% in 2006. almost 60% of South African residents who have heard of it claim not to know enough about this account. However the FinScope survey itself may be an under-estimate as only 1. in 2005.3 million claimed by the financial sector. According to FinScope.2 million people have a Mzansi account. To reduce costs and fraud during delivery and to increase choice for beneficiaries. 4% of the banked population was making use of Mzansi bank accounts. has proved a success. which could also have long term impact on access.sassa. They are either unemployed or do not have a regular income. 7 million children were receiving child care grants though 4 million parents and guardians. A Competition Commission is enquiring into bank fees. Main transactions conducted with an Mzansi account are cash withdrawals and. Plans are now being finalised to allow this within the banking act. Source: Summarisied from FinMark research. having been adopted by around 760.gov. However.and other regulatory requirements to ease barriers for entry and to reflect the lower risk to the financial sector. In 2005. or almost 1. South Africa now has one of the most advanced regimes among developing countries for consumer protection since this has been a key area of concern for sometime. Box 2: Mzansi Account – an amazing success so far The Mzansi account. designed to offer an easy-to-use and affordable banking product primarily for the unbanked in South Africa. the recently established SA Social Security Agency seeks to have 50% social transfers paid through bank accounts by 2008 as against 21% in 2006 (see www. deposits. 6% of those in LSM 1 – 5 . The Charter’s access targets include the commitment to ensure that 80% of adults in LSM 1-5 have effective access to retail banking products by 2008. A cell phone network operator and service provider (MTN) created a joint venture with Standard Bank to launch MTN Banking (see box 3).za). to a far lesser extent. Mzanzi was launched in 2004 by the banking industry to fulfil commitments made in the Financial Sector Charter to broaden financial access. By 2006. The private sector has worked together to introduce the Mzansi bank account (see box 2 for more details). with needed amendments. Consumer credit legislation has harmonised outdated and piecemeal legislation on consumer credit. The significant difference may be explained by either lack of user awareness (using the product without knowing the brand) or unwillingness to admit using a poor man’s account (a perception held by 41% of those who have heard of the product and 49% of those who have the product). 11% of the market claims that although they do not currently have an Mzansi account. Most Mzansi users are black and reside in urban areas.9 million adults were recorded as using Mzansi as against 3. a confirmation that the product is meeting the target market needs. Sixty percent of people with a Mzansi account claim this to be their first bank account. Mzansi has also found acceptance outside its core target market. The late 1990s has seen rapid expansion of social transfers. WIZZIT was launched to offer banking to unbanked and underbaked customers through cellphones. Different private sector providers are also improving their offering to customers. the reasons for not opening a Mzansi account among people who had heard of it are predominantly income related. 49% of the population was aware of the product in 2006 as against 44% in 20051.000 people who fall into the higher LSMs.

Rapid take up of the Mzansi account by 1. A formal Banking Enquiry is being undertaken by the Competition Commission to investigate competition in retail banking and the national payment system. and reduction in poverty. the benefits associated with informal or alternative forms of savings. The real test is whether state policies to serve the hard-to-reach act as an incentive or disincentive to the private sector in enhancing access for the majority. However despite changes in technology.moneyweb. Finance Minister Trevor Manuel shared his assessment in a recent statement11 "Despite these successes.za/mw/view/mw/en/page1655?oid=138959&sn=Detail South Africa: Committed to an Inclusive Financial Sector 10 .enabling the emergence of new players in financial sector. David Porteous (founder Chief Executive of FinMark Trust) has developed a useful access frontier framework to understand not only those who use financial services now but also why and how the access frontier can shift or be shifted in the future. While hailing the expanding access. improvement in product features and distribution points.co. compared to formal providers. confirming that users value the flexibility. not all 33% currently financially excluded adults (56% in LSM 1-2) will have effective access to financial services in the near future. National Treasury and the Competition Commission-led research in 2004 indicated that the South African Banks formed a 'complex monopoly'. There is considerable interest in the findings and great expectations that it will address the high cost of banking with many banks already preempting the findings by reducing fees. 11 http://www. location or other attributes. Finscope reveals that 42% of those using informal savings products in LSM 15 also use formal products. may outweigh their costs or risks. This may be due to their poverty. the private sector managed to retain significant operational and strategic flexibility to achieve these commitments. By actively participating in the finalisation of the outcome targets. None of the strategies being pursued . The political reforms and the emphasis on Black Economic Empowerment have provided the context and imperative for financial inclusion.8. ease of access and choice and that formal products may not be able to offer.9 million adults during 2004-06 (see box 2) also confirms that costs and features of bank account do matter for low income households. As the Eighty20 (a S Africa consultancy company) access to savings study points out. Policy makers have broadly endorsed continued private sector led provision and resisted the temptation for direct provision or artificial quotas. increasing incomes of the poor households through social transfers or applying moral pressure should reduce incentives for private sector players to expand access to poorer households. high banking charges are still an obstacle to even faster growth in the retail banking sector". Concluding Section Currently 67% of the adult population has access to financial services.

Increasing and effective access to appropriate and affordable financial services.rural roads. as against 15% 3 Choice 9 7 4 Others (including 3 2 not participating due to supply side factors (such as lack identity don’t know) Source: David Porteous analysis of documents. service fee affordability. rarely find that one financial product will meet their consumption. faster national highways open to residents as well as the visitors. South Africa: Committed to an Inclusive Financial Sector 11 . minimum balance required etc). account 91% of the currently unbanked are Reason 2004 2006 unable to access banking services 1 Income Reasons 78 91 due to demand side factors (lack of 2 Access Related 13 15 sufficient income. investment and emergency needs in the short. along with rising incomes will increase the proportion of adults using financial services. Over time both users and providers might wish to graduate from one level to the next. connected to bigger and better roads including the wider. As noted earlier. do not meet the bank Finscope data criteria. The final indicator of success is whether over time more people are moving on the ACCESS-USAGE-CHOICE continuum. medium and long term. However poor people. A small proportion of adults are happy to stay out of the financial sector out of choice. job). akin to the road network .However as progress is made in financial deepening. like others. few persons will choose not to use financial services if features and costs are relevant to their context. Policy makers should therefore focus on enabling a range of providers to offer increasing choice to users. the nature of the Table 3: Reasons for not having a bank challenge will become more difficult.

and it is over 30% in Southern Africa. and Celpay (Congo & Zambia) have all been showcased as leading innovators who are using technology to expand access to financial services in their various jurisdictions. FNB has surprised itself in finding that over 50% of its new cell phone banking customers are from the entry level market thus demonstrating that the low income market are not technology averse which is reinforced through the FinScope Africa surveys. FinMark Trust South Africa: Committed to an Inclusive Financial Sector 12 . BMI-T Much has been said about the potential for cell phone banking as it rides on the back of the remarkable explosion of cell phone usage in Africa (as demonstrated in Figure above) and beyond. However. FinScope Africa surveys find that over 20% of the unbanked have cell phones. Early banking pioneers such as WIZZIT and MTN Banking in SA. On this basis. the FinScope Africa supported FinAccess survey shows that over 20% have transferred airtime via their cell phone – a close proxy for a remittance. the difference between cell phone and banking usage will grow.Box 3 Cell phone banking Figure: African cell phone subscribers. Across Southern and Eastern Africa. all the main banks have joined the rush to provide a cell phone banking channels as can be seen from their respective websites. What is clear is that the drive to use a lower cost and accessible channel is not just about the low income market. as well as Globe (Philippines). In South Africa. and how it could dramatically lower the cost of banking and more effectively reach the mass market. Contributed by Jeremy Leach. WIZZIT in SA could be seen to be the exception in terms of its stated target market of the low income market. It will be interesting to see how the financial sector decides to embrace the opportunity that cell provides and how the policy makers decide to respond to these models in terms of opening up or closing the space. In terms of transactions. Many of the providers mentioned above in fact focus on using cell phones as a lower cost channel for existing customers rather than think of it as a mechanism to bring in new (low-income) customers. As cell phone usage explodes.

financialdiaries.za www.fsCharter. Survey Highlights including FSM Model: Finscope South Africa 2006 David Porteous Making Financial Markets Work for the Poor October 2004 David Porteous The Access Frontier as an approach and tool in Making Financial Markets Work for the Poor May 2005 David Porteous Just How Transformational is M-Banking? February 2007 FinMark Trust: Mid-term Review September 2005 2005 FEASibility (Pty) Ltd.References The impact of the Dedicated Banks Bill on access to financial services: A report prepared for The FinMark Trust July 2005 Alan Gibson Impact assessment of FinMark Trust’s activities.co.org. Vision 2010: Scenerios of the SA Financial System in 2010 FINMARK TRUST.com South Africa: Committed to an Inclusive Financial Sector 13 .za.finmark. 2005 Eighty 20 Access to savings in LSM 1-5 January 2007 FINMARK TRUST. November. March 2005 Web Resources Financial Sector Charter Council www. 2006 Rudolph Willemse.co.za www. www. RP Goodwin-Groen and Prof M Kelly-Louw The National Credit Act and its Regulations in the context of Access to Finance in S Africa Nov. Evaluating the Co-operative Banks Bill through the FinMark Lens.finscope. 2002-2005.

00 3.za/site/investor/sr_2005/bee/pillar2.51 0 0 0 0 1.htm South Africa: Committed to an Inclusive Financial Sector 14 .00 3.10 2.00 2.co.Annexure 1: Standard Bank Reporting against Financial Sector Charter Access to financial services summary scorecard Audited Audited Target Audited Access to financial services 1. Origination Low income housing (Rm) 72.20 score 2004 0 (Effective access for LSMs 1-5) 652 179 358 369 Savings products (Mzansi): (Effective access for LSMs 1-5) 652 179 358 369 Transactability (POR) Full service (POR) 2.14 0 2.20 0.20 0.00 2.24 2008 2005 Audited 2004 Max score score 2005 8 6.38 4 (Property (Income 1.00 1.23 3 300 375 2 651 168 2 041 level criteria) 2 018 0 2 2 2 2 1. Consumer education spend % of post tax operating profit 0.5% 72.standardbank.48 0.10 1.38 0. Access to financial services Transactions (Mzansi): products Not audited 2 Not audited 2 Not audited 2 Not audited 2 8 13 500 5 493 value criteria) Black SME (Rm) BAgriculture (Rm) 3.78 2.00 2.85% 73.97 Source: http://www.77 1.5% 74.26% Total score 18 11.