Do-or-die priorities for SME survival

With 70-80% of SMEs failing within the first five years, and only 1% growing to employ more than 10 people, South African SMEs are struggling to realise their own growth potential and become active drivers of job creation. And with slow economic growth, on-going political uncertainty, and a national budget shortfall of R209-billion, SMEs seeking much-needed funding face a tough time ahead.

Following the crisis at African Bank a few years ago due to non-payment of unsecured loans by its customer base, traditional lenders largely lost their appetite for exposure to unsecured lending. This has left the majority of SMEs without access to funding via traditional banking channels. And where such loans are on offer, the application process is loaded with administrative and bureaucratic red tape that can take more than three months to work through, with no guarantee that the loan will be awarded.

In fact, in our latest survey of South African SMEs, 76% of respondents said they suffered through tedious paperwork and waited for months only to have their applications for funding denied. This is creating an environment of immense risk to SMEs.

The #1 priority for SME success
I believe access to adequate and flexible funding is the number one priority for South African SMEs over the next six months. The results from our survey showed that access to credit is the single biggest business challenge South African SMEs face today, with a further 33% listing cash flow management as a primary challenge.
A deeper look into why SMEs are seeking funding brings further cause for alarm: nearly a quarter of respondents listed “unforeseen circumstances” as their reason for seeking funding. In a time of constrained economic growth and difficult trading conditions, profits are likely minimal, meaning any event causing need for quick access to funding could spell disaster – or even ruin – should the SME not get the funding they need.
To fill the gap left by the big banks’ unwillingness to expose themselves to unsecured business lending, a vibrant ecosystem of innovative fintech companies have emerged. In the Disrupt Africa Finnovating for Africa 2017 report, South Africa was found to be home to 94 fintech start-ups, 22 of which offer some form of lending support. Such tech-first lenders are able to adapt quicker to changing market needs than their big traditional peers, and are playing an increasingly important role in supporting a rather fragile SME sector. And since they are built on technology and unencumbered by legacy systems, this new breed of fintech company can process and award loan applications in a matter of days compared to the 2-3 months traditional lenders such as banks generally demand.

The role of the SME owner in ensuring survival, success
But it’s not all about the banks and lenders: SME owners also need to play a more active role in ensuring their businesses are resilient enough to withstand times of hardship. Many SMEs lack basic accounting and administrative processes, leaving SME owners blind to potential weak spots or areas of opportunity.
Successful entrepreneurs are able to take calculated risks to accelerate their growth and expand into new markets, but without a solid understanding of the current state of their business, any risk they take is potentially ruinous. A lack of adequate financial reporting also limits SMEs’ ability to apply for and secure funding,

Technology as enabler
Technology can provide support to SMEs wishing to strengthen their administrative and operational processes. Even competent use of something as basic as Excel could give SME owners much-needed insight into the state of their businesses. Online accounting software such as Xero gives SMEs enormous authority over their finances and helps business owners plan and strategise more effectively. In a do-or-die environment such as the one we currently find ourselves in, every slight advantage could mean the difference between success and failure, survival or bankruptcy.
SMEs should prioritise marketing their business effectively. In fact, 47% of respondents in our survey listed marketing as the biggest potential factor in growing sales and revenue, and yet only a third had a marketing budget. Technology can provide cost effective marketing opportunities to SMEs and assist with reaching and influencing key stakeholders. Google AdWords, social media profiles, LinkedIn groups, and even a basic website not only increases the SME’s exposure in the market, but also gives potential lenders comfort that the business is well-supported and in a healthy state.

Entrepreneurs should also seek membership of relevant associations and industry bodies to get access not only to other businesses and business owners, but to draw on the knowledge and research capacity most such associations and industry bodies produce. The better a SME owner’s knowledge of the market in which he or she operates, the better they are able to adapt to changes and ensure the long-term sustainability of their businesses.

Partner, and partner well
Partners can play a vital role in supporting and driving business growth in the SME sector. Whether it is an equity partner providing much needed financing during the early stages of a business, or a business partner that provides goods or services that are complementary to an SME’s core business, effective partnership is essential for long-term business sustainability.
SME owners should however take care to ensure the partner shares similar values and ethics, and strive toward building long-term trust with a view to ensuring mutual benefit between the two businesses. Our philosophy is to seek SMEs that share our passion for sustainable business growth, and to build a long-term partnership that enables us to provide on-going lending support through various growth stages.
In our current economic climate, a go-it-alone, shoot-from-the-hip approach is a recipe for disaster. SME owners should prioritise gaining access to funding, improving their financial and administrative processes, expand their marketing efforts, and seek appropriate partnerships to ensure they continue to survive and thrive.

By Trevor Gosling, CEO of Lulalend

How to submit an Employment Equity (EE) report

Employment Equity (EE) report submissions can be done manually or electronically. The Department of Labour advises employers to do their submissions electronically. You can do this by visiting the DoL Web site. Scroll down to “Online Services” and click on “Employment Equity Online Reporting”, or alternatively go directly to the relevant section.

Who submits Employment Equity (EE) reports?
• All designated employers with 50 or more employees.
• Employers with fewer than 50 employees who are designated in terms of the turnover threshold applicable to designated employers (Schedule 4 of the Employment Equity Amendment Act No. 47 of 2013).
• Employers who have become newly designated on or after the first working day of April, but before the first working day of October, must only submit their first report on the first working day of October in the following year.
• Employers who voluntarily wish to comply in terms of section 14 of the EE Act.

Employment Equity (EE) reporting requirements
• A designated employer must submit a report to the Director-General in terms of section 21 of the Act annually on the first working day of October or by 15 January the following year in the case of electronic reporting using the EEA2 form.
• Employment equity reports must be submitted electronically using the online reporting system available on the departmental website, labour.gov.za.
• An employer, who becomes designated on or after the first working day of April, but before the first working day of October, must only submit its first report on the first working day of October of the following year.
• A designated employer that is a holding company with more than one registered entity may choose to submit a consolidated report.
• A designated employer who chooses to submit a consolidated report contemplated in sub-regulation 10(4) must have a consolidated Employment Equity Plan which is supported by individual Employment Equity Plans for each of the registered entities included in the consolidated report.
• The method of reporting contemplated in sub-regulation 10(4) should remain consistent for the duration of the plan.
• An employer must inform the Department in writing immediately of any changes to their trade name, designation status, contact details or any other major changes, including mergers, acquisitions and insolvencies.
• A designated employer who is unable to report must notify the Director-General in writing before the last working day of August in the same year giving reasons for its inability to do so using the EEA14 form.
• A designated employer must retain a copy of the report for a period of five years after it has been submitted to the Director-General.
• In terms of Section 22, every designated employer must publish a summary of a report required by Section 21 reflecting progress in their annual financial report by using the EEA10 annexure for guidance.
• An employment equity report (EEA2), except for the Income Differential Statement reflected in the EEA4 form, submitted to the Department of Labour is a public document and a copy may be requested by the public by completing and submitting the EEA11 form to the Department of Labour, Employment Equity Registry.

Employment Equity (EE) submission date
Employers need to submit their reports on the 1st working day of October for manual submissions or by 15 January in the case of electronic submissions.

Source: EconoServ

How businesses contribute to SA

A report by Quantec Research, a leading South African economic consultancy, on Monday revealed the significant contribution made by South African business to the wealth of the country. The report notes, amongst other things, the significant contribution of business to the South African economy.

The study was commissioned earlier this year by Business Leadership South Africa (BLSA) to better understand the national footprint of its membership. Quantec Research was asked to conduct empirical research on the scope and magnitude of BLSA’s members’ activities and their contribution to the economy.

The study revealed several striking findings over the role of business in society; business is the most significant direct contributor to the South African economy. The direct output created by BLSA members was R1.9 trillion in 2016; 1.2 times the value of total budgeted expenditure by government in 2016.

Nearly R1 trillion in expenditure was paid to suppliers, enabling them to employ people, pay taxes, purchase supplies and make investments. BLSA collectively received 34.4 points out of 40 for black enterprise development as prescribed by BEE Codes.

Business employs 6.9 times the number of public sector employees. BLSA members themselves employ 1.29 million people, with another 1.97 million jobs supported in the supply chain. 596,719 people are dependent on BLSA employees. The 57 member companies in the study contribute 23.5% of total private sector employment, and pay full-time and part-time employees just under R2 trillion.

Business contributes to the public sector and supports the most important institutions of state through taxation. Taxation to government from BLSA members alone amounted to over R431 billion in 2016, 35.9% of total taxes collected. That’s the equivalent of more than one million teacher’s salaries, or almost two million police officers, or almost 1.5 million low-cost housing units.

Bonang Mohale, Chief Executive of BLSA, commenting on the findings of the report said: “This report confirms that business is a vibrant part of South African economy and society and a significant national asset. The footprint of BLSA’s members alone is notable – often bigger than that of Government itself. It’s a reminder that business touches every part of South African life and has a positive role and voice to play in the success of the nation.”

Source: IOL 

Crisis in trust revives faith in ink and paper

South Africa truly is the land of Chicken Licken – the fluffy little bird in the children’s story, not the purveyor of fiery wings at the local drive-thru.

Like the chick, South Africans are prone to jump to the worst conclusion in a crisis, of which there are plenty, and assume that this time the sky is indeed falling on our heads.

The notion of crisis, though, has some remarkably positive spin-offs.

A friend WhatsApped me the moment the lights went out during the packed official launch of Jacques Pauw’s The
President’s Keepers at Johannesburg’s Hyde Park shopping centre on Wednesday night: “Got to bit about State Security Agency. Electricity suddenly cut out so we could not hear Jacques. V suspicious.”

She and most in the audience assumed this was another ham-fisted censorship attempt. That’s what happens when there is a breakdown of trust in society. Nobody believes anyone anymore.

For now, though, heightened levels of cynicism are useful tools as South Africa looks for a more certain future at the ANC elective conference next month.

Horror writer Stephen King wrote recently: “It is the trust of the innocent that is the liar’s most useful tool.” He may have been referring to Donald Trump, but the sentiment fits here too.

South Africans have finally begun to lose their innocence courtesy of the flood of information on the criminal networks operating in the country. Those networks are haemorrhaging information. Whatever their motivation, whether to divert attention from their own activities or sow discord, South Africans can no longer claim to be ignorant of the issues.

Ironically, state capture is breathing life into an industry long feared on its knees. The nonfiction book trade, contrary to expectations when Amazon brought the Kindle to market, is booming. In an age of social media misinformation and the trust deficit that has produced globally, people are going back to reliable sources of information. The social media revolution, which 10 years ago was expected to enhance the quality of and access to information, has proved liable to being hijacked by agenda-laden vigilantes.

The saying “There is no honour among thieves” holds true. More and more, information is leaked by those fed up with how entrenched the rot has become or those hedging their bets in anticipation of the tide turning. The result is a breakdown in trust and reversion to print.

The written word somehow brings hope to a jaded public. Exclusive Books CEO Benjamin Trisk took delight this week in paying tribute to the SSA, which tried to force the withdrawal of the Pauw book with the subtlety of an amorous rhino.

Beyond the sordid detail is an unappreciated fact. Even the bad guys are worried about what might happen to them in the event of progressive political change.

Expect the noise levels to rise in the next few weeks as the ANC prepares to elect a new leadership. The stakes are high, and we probably haven’t yet seen the worst of the dirty tricks. There are massive vested interests at play. Either a venal elite gets to continue its plunder or we get a chance to redeem ourselves.

How do you tell the difference between fact and fiction? Ronald Reagan was succinct on the subject: “Trust, but verify.”

By Bruce Whitfield for Business Live

 

Many of South Africa’s largest physical retailers have committed to Black Friday, which will hit South Africa on 24 November 2017.

Due to its huge success for US retailers, Black Friday has been adopted in South Africa over the past several years, with more companies taking part each year.

While initially a big sale focused mainly on online retail in South Africa, the craze seeped into brick and mortar stores in 2016 including the biggest retailers like Makro, Pick n Pay, and Checkers.

The shopping phenomenon will take place on November 24, 2017, followed by Cyber Monday on November 27, 2017, where a host of leading online retailers drop their prices.

South African retailers are already advertising major discounts in preparation for the big day on the shopping calendar, with many expected to follow suit in the coming weeks.

Shopping malls across the country are also preparing for the day, with the likes of Menlyn Mall in Pretoria, and Irene Village putting out notices and billboards advertising the Black Friday craze that will be descending on the day.

Other malls that are readying for Black Friday 2017 include Canal Walk (Cape Town); Mall@Reds (Centurion); The Glen (Joburg South); Clearwater Mall (West Rand); La Lucia Mall (Durban).

These are 10 of the country’s largest retailers who have committed to Black Friday 2017 – from groceries, to toys, homeware and building supplies, the promise of great deals awaits those who venture out of their homes and into the shops.

While the deals themselves are under wraps, these retailers have confirmed their participation.

  • Checkers
  • Mr Price
  • MR Price online
  • Clicks
  • CNA
  • Edgars
  • Makro
  • Pick ‘n Pay
  • Dischem
  • Builder’s
  • Boardmans
  • Toys R Us
  • HiFi Corp

Source: Business Tech

Edcon’s profits up despite sales decline

Unlisted retail group Edcon reported on Tuesday that its net profit improved by 3.8% to R2bn, although sales declined in the September quarter from the matching period in 2016.

Edcon said its overall retail sales suffered from “fierce price competition through ongoing promotions by competitors” and its decision to close unprofitable stores.

In its flagship Edgars clothing chain, sales declined 0.9% to R2.46bn during the three months to September 23. Sister clothing chain Jet’s retail sales declined 1% to R2.28bn.

Edcon’s “speciality” division, which houses news agency CNA and Edgars Shoe Gallery, reported a 41.5% decrease in sales to R463m because the comparative period included Legit, which was sold in January. Excluding Legit, the speciality division suffered an 11.4% decline in sales. CNA’s sales fell 12.1%.

“Our trading environment remains challenging as consumer demand is weak on the back of tight credit conditions, low growth in consumer disposable income, political uncertainty and restrictive fiscal policy,” Edcon CEO Bernie Brookes said.

“Despite this, it is pleasing that the group’s strategic transformation is delivering positive retail sales growth in certain merchandise categories, such as ladieswear in both Edgars and Jet, as well as cellular in Jet, while childrenswear, footwear, cosmetics and cellular within Edgars are also starting to show signs of change.”

By Robert Laing for Business Live

Wealth tax and VAT hike being considered

With a massive tax shortfall in South Africa, new ways of drawing in revenue for the fiscus are being considered, including a wealth tax.

However, experts warn that a wealth tax is unlikely to cover even a quarter of South Africa’s current debt shortfall of R50 billion, meaning that a VAT increase in some form is also likely.

This is according to Judge Dennis Davis, who was speaking to BusinessDay ahead of a new wealth tax report set to be released by the Davis committee at the end of November.

Early signs indicate that a wealth tax could raise as little as R6-billion, meaning that it will have to be used in conjunction with other tax hikes.

“The problem with a wealth tax in SA is that it would be levied on an incredibly narrow base,” said Davis. “A huge amount of wealth in SA is also tied up in retirement funds, and we are busy investigating the implications of that.”

The committee is also concerned that a new wealth tax may penalise middle-class savings, and is aware that the South African Revenue Service (SARS) would need to institute a sophisticated system to administer it.

In comparison, Davis said that just a 1-percentage-point increase in the VAT rate (bringing it to 15%) would raise R20 billion.

Another option being mooted is a multi-tiered VAT system of 0%, 14% and 20%, said Davis.

This would result in a further twenty “necessities” being zero-rated, while luxury items such as smartphones could see a 20% VAT tax.

“It all comes down to the fact that we have to increase VAT,” said Davis. “Raising personal and company income tax isn’t going to get us there.”

Wealth tax

The Davis Tax Committee issued a media statement on 25 April 2017, calling for written submissions on the introduction of a possible wealth tax in South Africa.

This proposal arrived two months after an increase in the top income tax bracket for individuals by 4% to 45%, resulting in an effective capital gains tax (CGT) rate for individuals of 18%. This should be seen on the back of the increase the CGT rate by nearly 5% from 13.32% in 2014 to the current 18% in 2017.

Unlike income tax, where taxes flow from earnings (ie wages, salaries, profits, interest and rents), a wealth tax is generally understood to be a tax on the benefits derived from asset ownership.

The tax is to be paid on the market value of the assets owned year on year, whether or not such assets yield any income or differently put, it is typically a tax on unrealised income.

According to law firm ENSAfrica, while a wealth tax may undoubtedly be beneficial to address the divide between top and bottom level income earners, two main problems have been identified by some of the countries that have abolished this tax, namely the disclosure and valuation of the applicable “wealth”.

“Some of the reasons for its abolition have been cited as the disproportionately high administration and compliance costs associated with this form of tax, as well as capital flight from the country, said ENSAfrica.

“This sentiment is shared by France, where one report, established by the French Parliament, estimated that more than 500 people left the country in 2006 as a result of the impôt de solidarité sur la fortune (or ISF wealth tax). ”

“Looking at the above factors, it is difficult to see how a wealth tax will assist to improve South Africa’s weak economic growth and unemployment, in particular, if it incites a further flight of capital and a resultant decrease in economic activity,” it said.

Source: Supermarket & Retailer 

How many digital devices does you have in use in your business which could represent a risk for loss of personal information? This question is a lot tougher to answer than you might at first think and in this article we will find out why that’s the case.

The most obvious place to start is by looking at the fixed assets register where you record all of the information and communications technology (ICT) devices which you own, manage and depreciate in line with the rules issued by SARS. In times past this would capture most if not all the ICT items a company used: tech used to relatively high value, centrally procured and tightly managed.

That’s no longer the case for several reasons. First, the emergence of the “throw away” tech era. Items are now so low cost that they fall below the minimum limit to be classified as an asset for depreciation purposes and so they never make it on to the fixed assets register in the first place. Second the extensive use in business today of outsourcing or service agreements. Now we can find that the use of service providers may see our fixed assets register entries drop to zero as we no longer acquire assets in the name of our own organisation.

One of the more recent contributors to this is cloud computing, where entire layers of tech can simply disappear (think traditional server rooms) as they are replaced with a service (think offerings from Microsoft, Google, Amazon, Dropbox and other home-grown cloud service providers). Having said that, most organisations are still holding a significant inventory of desktop/tower PCs, laptops, servers and so on.

Outside of the corporate asset register the next place to look for digital devices which might represent a risk of personal information security compromises taking place covered under the POPI Act (POPIA) (see Condition 7, Security Safeguards for details) are your service agreements. This is where we need to think broadly, as so much of what we do in business today is digital without being a part of our core operations or production or accounting systems.

Examples are physical security systems such as access control – including biometric-based recognition and authorisation systems – whether used for staff or visitors or service providers. Coupled to tracking physical access through digital logging systems are digital monitoring systems, such as CCTV. Where this used to mean a network of fixed location cameras this is fast evolving as more companies start to use drone-based technology to complement their wired land-based platforms. Then there are the specialist tracking systems using a variety of technologies such as WiFi, Bluetooth and RFID to track people as they go about their work, particularly in high hazard job roles as are found in mining and other similar industries.

This can also apply in specialist applications such as health care where bedside monitoring systems track some of the most personal of data relating to health and wellness. Common other examples include multi-function devices such as the print/copy/scan/fax machines or digital switchboard you have on a lease agreement.

One of the largest areas that needs attention has nothing to do with what your organisation manages or pays for, directly or indirectly. It’s what’s become known as BYOD – Bring Your Own Device. As tech has moved into the hands of the consumer and out of the narrow control of the IT/ICT community the use of personally owned and funded devices has mushroomed.

Laptops, tablets, smartphones and smart watches are just some of the devices typically deployed to support directors, management and employees as they go about their daily business. In truth this list is much longer and should include home-based desktop PCs and servers, USB memory sticks (flash drives), CD/DVD disks, digital cameras, external hard drives and digital memory cards and no doubt more that you are probably thinking of right now. Every one of these BYOD devices represents a potential carrier of and therefore potential source of loss of personal information.

Just identifying all these devices can represent a major challenge if not tackled in a formal, structured and consistent way. Remember, POPIA requires (section 19) that the responsible party (the organisation doing the processing, or services providers – called operators in POPIA) takes “reasonable measures” to “identify all reasonably foreseeable internal and external risks to personal information in its possession or under its control”.

Clearly in today’s digitally diverse world that must go beyond consulting the fixed assets register. Look at your service agreements. Run a staff survey. Be inquisitive about where the risks are and how to address them. What to do once you have found those devices will be the subject of my next article.

By Dr Peter Tobin, www.popisolutions.co.za 

EFF calls for the nationalisation of our banks

If Economic Freedom Fighters (EFF) leader Julius Malema has his way, a “Banks Ownership Act” would be passed by Parliament, ensuring the State nationalise commercial banks in South Africa without compensation.

Introducing a debate on the issue in the National Assembly on Tuesday, Malema said: “There are no banks in South Africa that have meaningful ownership by black people”.

Malema said his party’s manifesto appreciates other forms of ownership are not excluded — including ownership by private individuals, the State and pension funds.

No single investor will own more than ten percent, he said.

“Our view is that the State ownership should be prioritised but should not completely close out other forms of ownership,” the fiery EFF leader said.

“This model of combined ownership, anchored by the State, makes sure banks are democratised…”

The ruling African National Congress (ANC) rejected Malema’s proposal.

ANC Member of Parliament (MP) Adrian Williams said banks would not just surrender their money.

“They are going to force this government to pay back the money,” Williams said.

“South Africa does not exist in a vacuum. When it comes to international finance we are just a cog in the capitalist wheel.”

He cited various examples where the State took over the ownership of banks and failed.

Williams said government would also assume the liabilities and debt, which would have an impact on the fiscus, and would result in poor South Africans and not the rich suffering.

The Banking Association of South Africa (BASA) also responded, saying the National Assembly entertaining the debate was “alarming”.

“Any nationalisation of banks will have a direct impact on stability, and will seriously undermine what fragile levels of confidence remain in our economy and society,” BASA said in a statement.

“We cannot allow ourselves to be in a position where we are further undermining the competitive positions that remain because of political expedience.”

BASA called on Treasury to provide certainty about its policy position regarding banks.

By Chantall Presence for IOL 

Absa takes a beating from fake news

From the propagation of Bell Pottinger’s white monopoly capital narrative to the new public protector’s CIEX report, political mischief and fake news have been tough on all the country’s banks — but Absa has taken the hardest beating.

According to the findings of the 2017 South African Banking sentiment index, compiled by BrandsEye, consumers were mostly disgruntled by the controversy around the bank’s purchase of Bankorp, demanding that it pay back the money the Reserve Bank had used to bail out the ailing apartheid-era bank.

The analysis, based on a sample of more than 1.8 million social media posts from about 500 000 unique authors between September 2016 and August this year, showed Absa was the worst performer with a net sentiment of -24.5%.

The posts were distributed to a proprietary crowd of vetted and trained local language speakers before being coded and verified by multiple crowd members, who assessed the sentiments of the posts.

Capitec had the highest net sentiment with 13.5%, followed by Nedbank with a score of -5.8%, Standard Bank with -6% and FNB with -7.6%.

Absa’s score had dropped from -11.3% in 2016, with 32.2% of its negative sentiment attributed to the release of public protector Busisiwe Mkhwebane’s report on the Bankorp saga.

Mkhwebane had recommended that Absa pay back R1.125-billion, but Absa maintained that it had met its duties relating to its purchase of Bankorp.

In July 2017 it launched a high court application for the review and setting aside of Mkhwebane’s findings and remedial action, but the damage to Absa’s reputation appears to have been done by then.

Jeremy Sampson, founder of Interbrand and veteran brand specialist, said Absa had fallen victim to a white monopoly capital agenda pushed by the defunct PR firm to the Gupta family, Bell Pottinger.

“The whole Bankorp thing from 20-odd years ago doesn’t seem to go away. I think Absa would argue that it was raised again [this year] by people who are being mischievous,” he said.

The Bankorp issue had been used as ammunition against the bank by people seeking to be “divisive” and “sow dissent”, Sampson said.

“Certainly there is a lot of mischievousness going on at the moment and it’s made that much easier because of social media,” he said.

Patrice Rassou, head of equities at Sanlam Investment Management, said few people properly understood the Bankorp matter but many were willing to drag Absa’s name through the mud online over it.

“For very political reasons the whole thing has been amplified on the internet and people have taken this at face value. It’s not a South African issue, it’s a global issue of fake news,” he said.

“You just have to have one tweet on something and people take it as fact when these things are firstly contentious, unproven and in a court of law [the accuser] is likely to lose.”

Rassou said corporates such as Absa were not equipped to rebut the “guerrilla warfare” seen online in which “the enemy is faceless”.

Overall the banking sentiment index did not find that banks had suffered negative sentiment driven by other matters related to the Guptas, but that consumers were more concerned with good governance than they had been in previous years.

“South Africans are holding their banks to higher standards now. If banks make a claim, and fail to match it, customers will call them out on this,” said Tania Benade, head of analytics at BrandsEye.

But Absa also received many negative complaints when it came to its services, such as the turnaround time on receiving credit cards and its R120 credit card replacement fee.

Absa had 15.6% more complaints related to branches than to online banking.

Included in the sentiment index was the net experience effect metric, which takes the net promoter scores of the banks, based on the likelihood of customers and non-customers to recommend a particular bank to others, to quantify the impact of customer experience on brand opinion. Capitec’s net experience effect exceeded those of the other banks, followed by FNB, Nedbank, Standard Bank and Absa.

Customer experience specialist and researcher Julia Ahlfeldt said that most consumers were unhappy with the basic “hygiene factors”, such as in-branch experience, app bugs and call-centre waiting periods.

“Most of the banks put time and energy into promotions and loyalty programmes but were unable to live up to their brand promise.

“Every time they do that it chips away at people’s perceptions of the brand.”

Ahlfeldt said that the average net promoter score for the industry in the US exceeded that of South Africa’s five retail banks, with the US being a highly competitive market.

But Rassou said that globally, perceptions around banks had always taken a negative slant, with banking services viewed as a grudge purchase by consumers. “Absa was seen as the leader in retail banking if you go back about 10 years ago but has lost a lot of market share to a number of other players, not just Capitec,” he said.
Barclays Africa, which owns Absa, had seen its share price drop 4.06% in the sentiment index’s review period, while Capitec’s grew by 22.78%.

“I think in the case of Absa, they’ve really suffered in terms of very low risk appetite. Absa has got the lowest market share in unsecured lending, which has been the big area of growth,” Rassou said.

Adrian Cloete, a PSG Wealth portfolio manager, said the valuations investors were prepared to pay when they traded in a company’s shares could indicate investor sentiment.

Based on this metric, “market participants are more optimistic about Standard Bank’s and [FNB owner] FirstRand’s future prospects,” he said.

Absa declined to comment without seeing the full index.

Source: 4-Traders

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top