Tag: South Africa

Cyber insurance for local businesses launched

Local insurance firm King Price has launched a new product that will cover local firms in the event of a cyberattack.

The product is known as cybersure and it includes cover for cyber liability and cybercrime, data breach expenses, damage to computer systems and data, associated loss of income, and more.

“Cyber attacks can be devastating from both a financial and reputational point of view, and it’s clear that cybercrime has become a major threat to South African businesses. Having cyber insurance is non-negotiable,” says King Price spokesperson Wynand van Vuuren.

At the moment the product is only available to businesses but King Price says it will be launching a personal cyber insurance product in 2018.

Cybersure customers will be covered for a variety of cyber attacks including ransomware. King Price says that in the event of a ransomware attack it will pay the ransomware if that is what is needed.

It seems like a rather solid product but we’d urge you to contact King Price or visit the website to get more information about cybersure to see if its right for you.

BY Brendyn Lotz for HTXT 

ANC calls for debt forgiveness as consumers owe R1.63tn

As at the end of September 2015, South Africa’s gross debtors’ book stood at a whopping R1.63 trillion, while the total credit rand value of new credit granted to consumers was close to R124 billion, says Nomsa Motshegare, CEO of the NCR.

Members of the committee wanted to know from the NCR what measures it has put in place to ease the burden of consumers who are over-indebted and struggling to repay their loans, and how it will act against reckless lenders.

The ANC’s Adrian Williams suggested that the regulator consider a kind of “debt forgiveness programme”, which would reprieve lower income groups. “This shouldn’t be for the rich who have just been spending recklessly.”
Committee chairperson Joanmariae Fubbs from the ANC added that debt forgiveness programmes have been implemented successfully in both developed and developing countries.

The NCR’s Motshegare said in her presentation to MPs that the credit regulator is continuing its investigations into reckless lenders, the overcharging of fees and misleading advertisements. “Lewis Group has for example agreed to pay a total of R75m to refund consumers since we’ve started the investigation last year.”

Forty-four of the investigations have been referred to the National Consumer Tribunal for hearings, one of which is the probe into Lewis Group.

Fin24 reported last year that in one instance Lewis charged a customer repayments of R18 000 after buying a washing machine for R6 000. Another customer bought a laptop, but was charged a compulsory R650 for a delivery fee, although the customer carried it out of the store. There was also R741 charged for an extended warranty.

During question time, the Democratic Alliance’s Geordin Hill-Lewis said the NCR appears unable to exert sufficient control over alleged reckless lenders such as African Bank and the Lewis Group.

“In recent months there have been numerous exposures of nothing short of viperous conduct of lenders, such as the Lewis Group. It’s not good enough to refund R67m to customers who had been overcharged when they made much more money than that with the scams they were running.

“Why doesn’t the NCR, the Hawks or the Reserve Bank take serious actions against these institutions? This reinforces the perception that there are no consequences for such behaviours,” Hill-Lewis said.
Motshegare responded by saying it is often difficult for the legal representatives at the National Consumer Tribunal to agree on dates for the hearings of the investigations that have been referred to the institution.

Fubbs concluded by saying that the committee would request the tribunal to appear before Parliament to give an update on the hearings of the investigations referred to it.

Source: ITWeb 

Debt and corruption scandals at Eskom Holdings SOC Ltd. make the utility the biggest risk to South Africa’s economy and the government needs to replace its management, Goldman Sachs Group said.

Eskom plans to raise almost R340 billion ($26 billion) in the next five years, while meeting R413 billionof interest and debt repayments, which amount to 8% of South Africa’s gross domestic product.

The utility is caught up in allegations of corruption related to contracts it signed with companies linked to the Gupta family, who are friends of President Jacob Zuma. It’s also without a permanent chief executive officer and has suspended its finance director. Zuma and the Guptas deny any wrongdoing.

“We are having discussions on solutions,” Colin Coleman, a partner of Goldman Sachs and head of sub-Saharan Africa, said in an interview in Johannesburg on Thursday, without elaborating.

“Government has got to put the governance in place and clean it out. It needs a permanent credible, independent non-conflicted chairman and a credible board and from that, credible managers.”

The New York-based lender in 2015 provided informal advice to the South African government on the sale of state assets to raise money for Eskom and proposals on how to improve the utility’s cash flow, people familiar with the matter said at the time.

Eskom faces lower demand, with South Africans last year using the least amount of electricity generated by Eskom in more than a decade.

The utility is also spending billions of dollars on new power plants that are years behind schedule and over budget. The company disclosed R3 billion of irregular expenditure in its financial results on July 20, a figure which its auditors said they couldn’t independently confirm.

“Eskom is the biggest single risk to the South African economy,” Coleman said.

“If you strip out corruption and sort out procurement, I’m sure there are efficiency gains there. There are self-help initiatives that can deliver a company that’s a lot more efficient. You’ve got to incentivize efficiency.”

The South African government, which saw its budget deficit widen to 92.2 billion rand in July, is hamstrung by an economy that’s barely growing, political infighting, and losses at other state-owned companies such as South African Airways.

Two ratings agencies cut South Africa’s foreign debt to junk in April, citing the firing of former Finance Minister Pravin Gordhan at the end of March and poor governance at state-owned enterprises.

Eskom, which has used R218.2 billion in government guarantees, hasn’t held a public auction for its debt in South Africa since 2014, relying on development finance institutions and export credit agencies for loans.

The power utility is confident it can reduce its dependence on the government by targeting funding sources that do not require explicit guarantees, the power utility said in an emailed response to questions.

“Eskom continues to access various debt markets, which include funding from development finance institutions, domestic and international bond issuances, funding supported by export credit agencies as well as short-term commercial paper bill issuances,” the company said.

Source: Bloomberg

Social media tightens its grip on SA

As data costs drop, social media use has intensified among South Africans in the past year, with Facebook now being used by 29% of the population.

This is a key finding of the SA Social Media Landscape 2018 study, conducted by brand intelligence organisation Ornico and high-tech market research consultancy World Wide Worx.

The study found that the number of South Africans using Facebook has increased by 14% since 2016, from 14 million to 16 million.

Of these, 14 million accessed the social network on mobile devices.

A big contributor to the increase was the growth in downloads of Facebook Lite, a low-intensity version of the Facebook app some mobile operators allow to be used without data charges on their networks.

The study showed that it was the fifth most downloaded app from the Google Play Store for Android phones in South Africa, with instant messaging apps WhatsApp and Facebook Messenger at numbers one and four respectively.

The Capitec app was a surprise entry into the list at number nine, making it the most downloaded banking app for Android.

“These are great examples of how tools geared towards the dynamics of a market can make a difference in uptake and penetration,” says Ornico CEO Oresti Patricios.

Mobile soon the default home of social media

“The staggering proportion of people accessing Facebook via mobile devices – no less than 87.5% – tells us that we can expect mobile to become the default home of social media.”

Twitter continues to grow at a slow rate in South Africa, in line with international trends, which have seen a small decline in the US balanced by a small increase in users outside the network’s home market.

It is now used by 8 million South Africans, up marginally from 7.7 million in 2016.

“Twitter remains the social platform of choice for engaging in public discourse,” said Arthur Goldstuck, MD of World Wide Worx.

“It is exactly half the size of Facebook, but its users get access to vastly more personalities, news sources, and opinions – and can become opinion-makers themselves.”

There were two surprise trends in the survey: the previously fastest growing app in South Africa, photo-sharing network Instagram, has seen its growth slow down dramatically, while professional network LinkedIn has maintained steady growth.

The former is now used by 3.8 million South Africans, up from 3.5 million, while LinkedIn usage has increased from 5.5 million to 6.1 million.

The study included a survey of social media use by South Africa’s biggest brands, with 118 participants providing insights into their social media practices, strategies and results.

The survey found significant shifts in each of the platforms used by brands, mostly upward. Facebook is now almost pervasive, in use by 97% of brands, from 91% the year before.

Twitter has increased marginally, from 88% to 90%, while LinkedIn and Instagram continued their relentless rises, now both standing at 72%.

YouTube has fallen slightly behind them, despite a marginal rise to 68%.

Declines were reported for Pinterest, Google+, WeChat, WhatsApp and SnapChat.

“The findings underline the lesson that widespread consumer takeup of a platform, as we have seen with WhatsApp in particular, does not lend itself readily to brands communicating with those consumers,” Patricios said.

A similar picture emerged when brands were asked whether they advertised on social media.

Facebook is by far the most popular for advertising at 86% of brands, with Twitter and Instagram in distant second and third place at 45% and 40%. LinkedIn comes in fourth, at 35%.

“It is noteworthy that most advertisers believe they see a return on investment when they advertise on social media,” Goldstuck said.

“By far the most common benefit they see is brand awareness, followed by customer insights and brands.”

Source: Fin24

Indebted consumers stretch SA to its limits

Credit extension is growing faster than job creation, and the moribund economy cannot carry that burden forever

A 2014-15 World Bank report declared that South Africans were the world’s “biggest borrowers”. Consumer credit-use statistics — a comparison of employment and credit consumer numbers — suggest that South Africans are failing to manage their debt responsibly and that some credit providers might be missing the mark regarding their criteria in affordability assessments.

Despite tougher affordability requirements and large-scale efforts to educate consumers, credit use is outpacing employment growth, and the over-indebted gap is widening.

There were 16.9-million credit-active consumers in 2007, the national credit regulator’s Credit Bureau Report reads. At the time, 6.38-million (or 37.7%) had an impaired credit record. In 2013, there were 20.21-million credit-active consumers, of whom 9.69-million (47.9%) had impaired records.

A record is declared impaired if a debtor is three or more months in arrears on an account, if the debtor is under administration or if there are judgments against the debtor.

In the fourth quarter of 2016, there were 24.31-million credit-active consumers, 9.76-million of whom had impaired records — 40%, or two out of every five credit-active consumers.

While employment has increased by only 18% since 2007-08, the number of credit consumers has grown by almost 44%. The percentage of consumers in bad standing grew from 37.75%, to 40.15%. There are now 24.31-million credit consumers — more than 8-million more people than the total number of employed people in SA.

Even allowing for the fact that some people such as financially supported students may not need a job to qualify for certain credit accounts and not all SA’s employed people will be credit active, there is a huge difference in the numbers.

The official credit statistics for 2016’s fourth quarter peg collective consumer debt at more than R1.69-trillion. A significant portion of this — R8.75bn or more than half of debt book value — comprises mortgages, which are considered a wealth-creation type of debt.

For most people, a home loan will be the largest personal debt they incur in a lifetime.

If we move from rand value to sheer number of credit facilities by type, the numbers shift significantly. Mortgages only represent 4.47% of credit accounts. Credit facilities such as credit cards, overdrafts and store cards make up 65% of credit accounts and unsecured credit 14.6%.

These figures do not account for informal debt. Credit bureaus do not list what consumers owe municipalities, in school fees or unpaid medical accounts. One estimate is that only 40% of consumer-debt information is captured by credit bureaus.

As private loans and lending granted outside the formal system, such as loan sharks or mashonisa loans, are not captured, the problem is likely to be much larger than official numbers indicate.

World Bank survey data from a sample of 1,000 people in the Global Findex Report showed that 86% of South Africans took loans in 2016, mostly from acquaintances or private microlenders.

If risk pricing is added to the picture, the poorer end of the consumer market is out in the cold. All credit on offer — from loans to store cards or hire purchase agreements — is priced for risk: the higher the perceived chance of default, the higher the interest rate charged. Low-income earners will, therefore, usually be charged more than high-income earners for the credit on offer.

Instead of excluding poor and risky consumers from credit, many providers allow access but at higher interest rates. Prohibitive rates, greater need — due to lack of generational wealth or more insecure income — and a lack of financial education collide, often overwhelming the most economically vulnerable.

Under apartheid, most South Africans were denied access to certain financial services including credit, either through direct policies or systemic barriers. When that political system was dismantled, there was a desperate need to reform the social system and the barriers to financial inclusion.

The government has been chipping away at the legislation ever since with repeals, new acts, amendments to existing legislation, patches and policy reimagining. The goal is a very narrow sweet spot — increasing financial access while limiting opportunity for abuse of the hungry-for-credit populace.

The Usury Act of 1968 was replaced by the National Credit Act of 2005. The National Credit Amendment Act in 2015 was a further tightening of the reins, especially in terms of the affordability assessments that credit providers are now required to perform. With each new piece of legislation, the government has tried to get one step closer to that dual target.

Their success is a matter of debate, depending on which side of the market you find yourself. One particularly controversial move was the credit information amnesty, or as the credit and legal fraternity know it, the Removal of Adverse Consumer Information and Information Relating to Paid-up Judgments regulations, 2014.

It compelled credit bureaus to remove information of judgments, defaults, and terms such as “delinquent” or “slow paying” from consumer credit profiles, provided that the capital amount owing had been cleared.

This became a requirement of the bureaus and the credit providers supplying payment information to them. It also meant that no matter how abysmal consumers’ track records of debt payments were, if it was paid up, they were given a clean slate by credit providers doing new assessments.

It was championed by the Department of Trade and Industry and one that caused some ructions between it and the Treasury. In 2015, the then chief director of financial sector development at the Treasury, Ingrid Goodspeed, said that the Treasury had “fought that credit information amnesty, we fought it to the last day”.

Credit providers needed “more information, not less”, she said at the time.

“The fact that you wipe it out has not … changed anything. The same people who were overindebted before are now even more overindebted.”

The Treasury was asked to update its position on the matter, but was unable to respond in time for publication.

Officially, two out of five consumers are credit-stressed, and unofficially, the picture is much worse. By omitting municipal, education, private or loan-shark debt, and education debt, our country’s credit numbers underplay a significant portion of the personal debt carried by the average consumer.

Add to that the pressure of crippling debt-recovery measures such as garnishee orders and asset attachment, insecure employment, stretched regulators, loopholes in the laws and the rising cost of living and the picture is far worse.

Economists say that the amount of consumer debt a country can support depends on the health of the underlying economy. SA may be about to find out what the limits are.

Source: Supermarket
Graphics credit: Dorothy Kgosi

SA’s shopping centre glut squeezes property firms

Sector heavyweight Growthpoint Properties last week declared dividend growth of a decent 6.5% for the year to June 30.

Income payouts were boosted by the company’s recent entry into Romania as well as the inclusion of profits from its new trading and development business.

However, if one looks at the underlying performance of Growthpoint’s domestic assets there is no doubt it is becoming increasingly difficult to make money on SA shopping centres, offices and industrial buildings. Growthpoint is the JSE’s largest and most diversified SA-based property counter with total assets of R122.3bn (70% local), which makes it a reliable bellwether of the general state of the SA commercial property market.

Growthpoint CEO Norbert Sasse said at the annual results presentation that the SA business was operating in an “extremely tough market where any growth is good growth’’. He said as long as the local economy stayed in the doldrums, investors shouldn’t expect fireworks from Growthpoint’s SA portfolio.

Oddly enough, he said, overall vacancies were down over the past year, from 5.7% to 4.4%. But retaining tenants has come at a cost, in the form of rising pressure on rental growth.

“Tenants can now literally dictate how much rental they want to pay,” said Sasse.

The impact of a weak economy is particularly evident in Growthpoint’s retail portfolio, made up of 58 shopping centres across SA including stakes in Brooklyn Mall in Pretoria, La Lucia Mall in Umhlanga and Festival Mall in Vanderbijlpark.

Growthpoint’s flagship asset is the V&A Waterfront precinct in Cape Town, which it co-owns with the Public Investment Corp.

Trading densities (turnover/m²), a key metric used to measure the strength of retail spending, in Growthpoint’s retail portfolio, grew 1.3% on average for the year to June, down from 6.1% in the previous financial year. Trading density slowed markedly even at perennial star performer, the V&A’s Victoria Wharf shopping centre, from 13% to 2%. Sasse ascribed this to the role a stronger rand has played in dampening foreign tourist spend. He said there was no doubt that retailers were under severe pressure.

“The market has been hit by a double whammy: weaker retail spending as well as an oversupply of new retail space. Lease renewal success rates have deteriorated and vacancies are ticking up as tenants consolidate space and close underperforming stores.”

Though the advent in recent years of international retailers such as Zara, Cotton On, H&M, Forever 21, Starbucks and the like have supported demand for retail space in SA malls, Sasse said international retailers were not a natural “plug-in” to fill rising vacancies.

A similar slowdown in trading density growth and rising vacancies is evident from retail-focused Hyprop Investments’ latest results.

Hyprop owns a R27.7bn portfolio of nine malls across SA — including Canal Walk in Cape Town, Rosebank Mall and Hyde Park Corner in Johannesburg and Clearwater on the West Rand. Trading density growth in Hyprop’s SA portfolio slowed to 1.4% for the year to June, down from 5% a year earlier.

Vacancies increased to 1.9% (0.8% in June 2016) on the back of a number of store closures, among others that of Stuttafords. Hyprop nevertheless still delivered an impressive 12.1% growth in dividends for the year to June, supported by the first full-year inclusion of its European mall portfolio.

Hyprop owns stakes in four shopping centres in southeast Europe.

Peter Clark, portfolio manager at Investec Asset Management, says lower trading density growth in Growthpoint and Hyprop’s retail portfolios is indicative of some of the issues in the retail sector.

“Trading densities are under pressure from both weak consumer spending and the large increase in space in recent years. Ultimately, lower trading density growth has to put pressure on core rental growth,” says Clark.

Analysts note that the weak domestic climate will force local property players to look for new revenue sources if they want to maintain inflation-beating dividend growth. Growthpoint, for one, has recently introduced a number of initiatives in a bid to boost dividends.

For instance, for the first time the company this year included profits from its new trading and development business in income payouts to shareholders.

Kundayi Munzara, executive director and portfolio manager at Sesfikile Capital, notes that if development fees and trading profits are stripped out, Growthpoint’s dividend growth for the year to June would have been closer to 5%.

Earnings were further supported by the entry late last year into the Romanian office market via a R2.8bn stake in LSE AIM-listed Globalworth Real Estate Investments. Until now, Growthpoint’s only offshore interest was a 65% stake in Australian-listed Growthpoint Properties Australia.

Growthpoint has also created a new revenue stream by establishing a fund management business that will focus on health care, among other areas.

Health care (hospitals, clinics and medical suites) has not
traditionally been the domain of listed property funds. The company has already bought four hospitals and one medical suite with plans to grow the fund to R10bn over the next seven years.

Munzara says Growthpoint’s unlisted health-care fund is a great initiative.

“We believe the SA property market is ripe for well-run unlisted property investment products similar to those seen in developed markets such as the UK, Australia and the US.”

Growthpoint’s accelerated pace of disposals, with property sales of around R2bn over the past year, is also encouraging, notes Munzara.

“We like management’s midterm plan to sell 5% of the SA portfolio.

“We have often criticised Growthpoint for selling too little relative to acquisitions and developments, and we hope the ratio will swing towards more disposals once the large development pipeline is complete.”

By Joan Muller for Business Day

SA exits recession

South Africa’s economy exited its second recession in almost a decade in the three months ended June 30 after agricultural output surged.

Gross domestic product increased an annualized 2.5 percent in the second quarter compared with a revised decline of 0.6 percent in the previous three months, the statistics office said in a report released on Tuesday in the capital, Pretoria. The median of 21 estimates compiled by Bloomberg was for growth of 2.3 percent. The economy expanded 1.1 percent from a year earlier.

Low demand for the country’s exports and political turmoil that’s caused instability have weighed on output by Africa’s most-industrialized economy. S&P Global Ratings and Fitch Ratings Ltd. cut the nation’s international debt to junk in April after President Jacob Zuma fired Pravin Gordhan as finance minister, with the changes roiling markets and battering business and consumer confidence. The central bank cut its benchmark rate for the first time in five years in July, citing concern about the growth outlook.

“Higher commodity prices likely continued to catalyze growth in the mining sector,” Mamello Matikinca, an economist at FirstRand Ltd.’s First National Bank unit, said in an emailed note from Johannesburg before the release of the data. “While a shallow rate-cutting cycle may provide some relief to the consumer going forward, we nonetheless expect the recovery to be short-lived given just how weak consumer confidence and real wage growth is.”

Agricultural output surged 34 percent, the agency said.

The central bank halved its economic growth forecast for this year to 0.5 percent and trimmed the outlook for 2018 to 1.2 percent from 1.5 percent. GDP expanded at the lowest annual rate since a 2009 recession last year.

The inflation rate dropped to an almost two-year low in July, reaching 4.6 percent.

The rand 0.1 percent to 12.9543 per dollar by 11:31 a.m. Yields on rand-denominated government bonds due December 2026 were little changed at 8.52 percent.

The government will probably cut its output forecast in October, when Finance Minister Malusi Gigaba delivers his first medium-term budget policy statement.

In the February budget review, the National Treasury left its growth estimates unchanged from the mid-term budget in October, with the economy forecast to expand 1.3 percent this year, 2 percent next year and 2.2 percent in 2019.

Annual growth has slumped since 2011, which has hampered the government’s ability to reduce the 27.7 percent jobless rate.

By Arabile Gumede and Thembisile Dzonzi for Business Live

Counting the cost of corruption

Corruption costs the SA gross domestic product (GDP) at least R27 billion annually as well as the loss of 76 000 jobs that would otherwise have been created, according to Minister of Economic Development Ebrahim Patel.

This is according to a recent exercise by his department to quantify the cost of corruption in the public sector, based on just a 10% increase in price in infrastructure projects as a result of corruption.

Collusion increases the costs of doing business, stunts the dynamism and competitiveness that is needed and has a negative impact on growth and jobs, Patel said at the Competition Law, Economics and Policy Conference at the Gordon Institute of Business Science.

The culture of “rampant acquisition” is spreading so widely that the professional standards of integrity which are a hallmark of functioning institutions are under enormous pressure. There are some troubling matters to address in looking at corruption and the collusion therewith by professional firms, from auditors to lawyers and others.”

A World Bank study on competition in SA noted, for instance, that in the case of four cartels in maize, wheat, poultry and pharmaceuticals – products which make up 15.6% of the consumption basket of the poorest 10% – conservative estimates indicate that around 200 000 people stood to be lifted above the poverty line by tackling cartel overcharges.

“There are things we can do, practical things, while the wider battle to ensure integrity in the public and private sectors is pursued,” said Patel.

The construction industry, through the seven largest companies, for example, has embarked on a major transformation programme, with three prominent companies selling a large block of their shares to black South Africans. In all, the deal will place construction turnover of “billions of rand” in the hands of black South Africans over the next seven years.

Competition policy is going through something of a golden age, with enormous public interest in the work of the competition authorities and widespread public debate on what is done and what should be done.

Public interest

“The past seven years have seen a focus by government on the public interest consequences of mergers and acquisitions, specifically on employment, small business development, ownership by black South Africans and local industrial capability,” said Patel.

“This is not surprising in a society with so many people who are unemployed, where poverty levels are deep, many citizens feel excluded from the economy and wider inequalities threaten the social stability of our still-young democracy. This is a fertile field for demagogues who offer simplistic solutions to the many who are desperate.”

He pointed out that some commentators, lawyers and economists – while acknowledging the extent of the problems of joblessness – have asked whether it is the proper remit of competition policy to deal directly with unemployment and with the strong focus on public interest issues.

“Two decades ago, economic goals in many countries were framed in the language only of rates of economic growth, with the widespread presumption that growth always, often automatically, results in wider benefits for society,” said Patel.

“Today we live in a wiser world where there is compelling evidence that strong growth has in many cases gone with deepening inequalities and social exclusion, for example of young people. Today there is a broad consensus on the need for inclusive growth.”

There is also a growing constituency of policy-makers across the world who see value in well thought-out and transparent public interest conditions being attached to mergers and acquisitions to bring out the inclusivity of the growth.

“In 1994, at the start of the democratic era, the new incoming government identified high levels of economic concentration as a critical challenge. Today, some 23 years later, the public discussion has returned to this issue,” said Patel.

Manufacturing

In research currently being done on concentration ratios in the manufacturing sector, preliminary results suggest that the top five firms in the sector as a whole accounted for 13.7% of total manufacturing sales in 2011. By 2014 this had risen to 16.2%.

In a three-year period, the data seem to show a growth of 2.5 percentage points in market share – or based on estimated rand value, it may be equivalent to as much as R54bn of additional sales that, had market share ratios remained the same, would have gone to smaller firms.

“Some of this may be due to efficiency gains or other reasons that could be enhancing overall welfare. But clearly, if increased concentration has the effect of displacing smaller companies, issues of social equity loom large. These levels of concentration may be economically unjustified and, if so, should be addressed,” he emphasised.

Racially skewed

In addition, many parts of the economy are still faced with stubbornly racially-skewed ownership profiles, according to Patel.

“The exclusion of most historically disadvantaged South Africans from the ability and opportunity to own productive assets must be remedied to unlock the competitive and development benefits of full participation by all in the economy,” he said.

“The effect of these two structural features of these markets is to stunt economic growth, prevent entry of new players, reduce consumer choice, limit the levels of innovation and dynamism in the economy and feed a growing resentment among black South Africans of the failure to realise the promises made by the Competition Act and the vision of the constitution.”

Source: Business Tech

South Africa can expect at least three big new banking options within the coming months – all of which will be entering a highly competitive market.

A poll conducted in August by BusinessTech, generating over 10,000 responses found that Capitec is far and away the bank most South Africans would switch to, garnering 44% of the votes.

Capitec said recently that it has added 400,000 customers since February 2017 to become the second biggest bank in the country by this metric.

Its success has forced South Africa’s other banks to compete more effectively, and has led to Absa and FNB in particular to launch entry-level accounts that target Capitec’s market approach.

However, Capitec will soon face stiff new competition of its own, through Patrice Motsepe’s Tyme which promises to cause ‘disruption’ of its own through a digital play.

Tyme joins insurance giant Discovery, which also plans to launch a commercial bank, while government has plans for a retail offering of its through the South African Post Office – all of which are expected to launch sometime between now and late 2018.

Each offering brings with it unique features which could entice customers from the current “big five”.

Tyme

Billionaire Patrice Motsepe made headlines last week after he announced that he was set to challenge South Africa’s biggest banks with investment company African Rainbow Capital (ARC) close to securing a banking license.

Tyme was granted a provisional license by the South African Reserve Bank in 2016, with Johan van der Merwe, co- CEO of African Rainbow Capital stating that the company expected a full licence before the end of September.

“The South African banking environment is due for a bit of disruption,” said van der Merwe.

“While Capitec has been able to play that role, the soon-to-be-licensed lender will be a disruption over and above that. This will be a complete game changer.”

“The regulator is looking at the cloud-based system that ARC’s fintech partner is using to make sure it works before granting a full licence,” he said.

Tyme is reportedly signing up 5,000 new customers each week, following the Commonwealth Bank of Australia’s acquisition for a reported AU$40 million.

Arguably, Tyme’s biggest asset is its in-house developed “know your customer” KYC accreditation solutions.

These allow customers to open a simple bank account over their mobile phone, and open an unrestricted bank account from a remote location instead of having to enter a bank branch.

This form of unrestricted account access and cloud-based solutions is likely to tie-in with African Rainbow Capital’s July announcement that it invested in 20% of fixed and mobile data network operator Rain.

Discovery

In March 2017, Discovery said that it had received authorisation from the Registrar of Banks to establish banking operations in South Africa, and is on track to launch its banking products next year.

Discovery CEO, Adrian Gore first announced plans for a retail bank in 2015, and stated that it would act as a direct competitor to Absa, FNB, Nedbank, Capitec, and Standard Bank.

The insurer has reportedly seen great success with its Discovery Card joint venture with FNB, which would provide a launch pad for full banking services.

“We’ve got the capital, we’ve hired bankers, we’re building substantial systems. We want to make an offering that’s relevant and can win market share,” said Gore.

Discovery has an advantage over the big four traditional banks, as it does not have to maintain a country-wide network of branches and ATMs. This means Discovery Bank’s costs have the potential to be lower than its competitors.

Former FNB CEO Michael Jordaan also believes that the technology available to Discovery could make it a major disruptor in the financial sector as it uses its vast resources and lower cost base to offer clients lower banking fees and better interest rates.

The South African Post Office

While not as eye-catching as Tyme or Discovery, the South African Post Office (SAPO) could prove to be a large disruptor in the financial sector because of its ease of accessibility.

Speaking at the World Economic Forum in May, telecommunications minister Siyabonga Cwele said that the Post Office’s transition into a development bank will be government’s first big step in “radically transforming the financial sector and challenging the current banking institutions”.

“It’s not going to be a normal bank like the big four. It’s going to be a developmental bank to deal with the market that is not being served at the moment,” said Cwele.

He added that, despite the higher risks involved, the Post Office will also look at funding entrepreneurs with small loans.

“We are going to need a very strong risk management system. The issue of financial inclusion is part of radical economic transformation. We are not talking about reckless access to finance.”

Current SAPO CEO Mark Barnes will likely head up the new bank, which is expected to become a fully-fledged consumer bank sometime in 2018.

The bank could also be bolstered massively should it acquire the rights to distribute social grants to over 17 million South Africans from SASSA.

Source: BusinessTech

Tech trends SA companies care most about right now

Dimension Data has released its latest digital workplace report, highlighting which technologies South African companies are currently developing and working with.

In South Africa, Dimension Data spoke to 73 respondents of companies with at least 1 000 employees, from large businesses with headquarters in the region.

The companies surveyed reported that mobility was still the most important area for supporting broader digital workplace initiatives.

27% of organisations said that embracing multiple-device-ownership models (BYOD, COPE, company-liable) is the most important technology trend, and 89% identify mobile devices and business applications as being technologies that support business process improvement.

This was followed by an embracing of the consumerisation of IT (25%) as well as an increasing demand to make video communication more pervasive (21%), said the report.

“Ensuring that employees are well-connected and empowered with mobile technologies and applications has resulted in enterprise mobility becoming a key theme of broader digital transformation efforts,” said Dimension Data.

“Those leading on enterprise mobility strategy development and implementation should therefore ensure that mobility initiatives map well against broader digital transformation business objectives.”

Cloud

South African organisations are also turning to the cloud as an alternative to traditional on-premise deployments of workplace technologies.

For communications tools, such as WebEx and desktop video conferencing, 34% of South African organisations have deployed these in their own private cloud environments.
For collaboration applications, such as SharePoint and enterprise social, 22% of South African organisations have deployed these in their own private cloud environments.
For business applications, such as ERP, 18% of South African organisations have deployed these in their own private cloud environments.
“A better cost model is the top reason South African organisations are moving to cloud applications,” said Dimension Data.

“In time, organisations will rely more on fully hosted services for a wide range of digital workplace technology. The opex model is attractive to companies trying to rein in capital expenses, and cloud-based applications are considerably easier to keep up to date.”

However, it noted that many cloud-based applications do not yet meet the security and compliance requirements of many organisations.

Organisations also have existing assets that they own, that work well, and that do not need to be retired, it said.

“For example, 62% of South African organisations host business telephony applications on-premise, with only 5% being deployed in a private cloud environment. For this reason, managed services remain attractive for large organisations, which rely on them heavily as a way of keeping IT costs to a minimum.”

Enterprises are also turning to hybrid deployment models to keep one foot firmly planted in the current world of premise based technology whilst taking their first steps toward the cloud.

Hybrid deployments let organisations move some workloads to the cloud whilst retaining others on premise.

“Organisations with security or compliance concerns can keep applications on site or in private data centres under their own management whilst moving other, less sensitive applications to the cloud. Enterprises with significant investments in systems and applications deployed on premise can transition them to the cloud over a period of years, retiring legacy technology slowly as it becomes obsolete.”

Looking forward

Consumerisation and migrating to the cloud may occupy the minds of CIOs focused on here-and-now issues around digital transformation. However, those keeping an eye to the future see the dawn of a whole new set of technologies that will shape the digital workplace for years to come.

These primarily take the form of augmented reality which has practical uses for field technicians and other specialists needing instant access to information and AI/machine learning which are helping organisations derive insight from vast quantities of data and helping get the right information to the right people at the right time.

Unsurprisingly, the Internet of Things is also dovetailing with – and increasingly driving – a greater reliance on automation in the enterprise, as sensors variously monitor and control lighting, door locks, vehicles, medical equipment, manufacturing machinery, surveillance cameras, and other systems.

75% of South African organisations say they will have a practical use case for augmented reality technologies within the next two years.

The percentage of South African organisations (26%) that say they will never have a practical use for augmented reality technologies aligns quite closely with the global findings, which show that 34% of organisations see no value in this technology.

“It is still very early days for augmented reality technologies, especially in the enterprise context,” the group said.

“The focus is still very much on the hardware, as opposed to the new business outcomes that the hardware could potentially help support. The value of augmented reality technologies needs to be better communicated and in contexts that resonate with enterprises. A more enriched app ecosystem that supports the core technology will be vital to its enterprise success.”

“As this develops, and as the use cases for the technology become better contextualised, the value proposition of AR will be better understood by organisations across industries.”

21% of South African organisations are investing in intelligent agents now, and 18% are investing in IoT, but investment will increase significantly in those
areas over the next 24 months.

“Undoubtedly, however, it is analytics tools that interest South African organisations the most. Strong investment is planned in the area of workplace analytics, with 94% identifying that some form of investment will be made in this area over the next two years.”

“The most important use case for these analytics tools will be in managing the employee lifecycle and improving the customers experience.”

Source: Business Tech

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My Office News Ⓒ 2017 - Designed by A Collective


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