Telecommunications minister Siyabonga Cwele has indicated that the South Africa 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 ‘big four’ 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 in a Reuters interview at the World Economic Forum for Africa on Thursday.
He added that despite 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.”
South Africa’s big four banks – Standard Bank , FirstRand , Barclays Africa and Nedbank – reportedly control about 90% of the market.
In contrast, a 2016 survey by Finscope found that about 11% of the adult population were “financially excluded” or unbanked, accounting for more than 4.3 million adults.
SAPO CEO Mark Barnes indicated earlier this week that in addition to becoming a fully-fledged consumer bank in 2018, the state-owned enterprise was also in a position to deliver grants to millions of South African around the country.
“We followed cash from its source at Treasury to the end user point, and we didn’t find anything in that delivery chain that isn’t replicable at a fairly good cost,” said Barnes.
“We are an organ of state and the payment of social grants is a function of the state; so we can contract to protect people’s data under instruction.”