Capitec CEO says South Africa has a big money problem

Capitec CEO Gerrie Fourie says that South Africa’s high interest rates make acquiring cash more expensive than in other countries.

Speaking to BusinessTech following the release of Capitec’s 2025 financial results, Fourie said that South Africa needs access to cash to increase GDP growth.

Economic growth has stagnated for more than a decade, and remained below 1% in 2023 and 2024. Growth is projected at only 1% for 2025—if that.

However, Fourie noted that because South Africa has a massive difference between inflation and interest rates, getting access to money is incredibly expensive.

The latest inflation print for March stood at 2.7%, a five-year low. The figure is also below the Reserve Bank’s target range of 3% to 6%, and well below the target midpoint of 4.5%.

Meanwhile, the repo and prime interest rates currently stand at 7.50% and 11.0%, respectively. Higher interest rates increase the cost of borrowing, limiting the accessibility of money.

Fourie said the gap between the inflation and interest rates is far higher in South Africa than in other parts of the world.

The Effective Federal Funds Rate (EFFR)—the average interest rate that American banks charge each other for overnight lending—currently stands at 4.33%, while US inflation is at 2.4%.

The main refinancing rate in the euro zone is 2.4%, while inflation in the union is 2.3%. The UK’s base rate is 4.5%, while inflation is 3.0%.

Although the rand’s inflation rate is similar to that of other countries, interest rates are far higher than those of developed economies, driving higher costs for the local banks.

Nevertheless, Fourie said that he understood why the Reserve Bank’s Monetary Policy Committee (MPC) did not cut interest rates in its latest March meeting.

The Reserve Bank’s pause on interest rates in March followed three successive cuts of 25 basis points each in September and November 2024 and January 2025.

Fourie acknowledged that the uncertainty created by the “Trump tariffs” limited the Reserve Bank’s ability to cut interest rates further.

US President Donald Trump announced a global 10% tariff on imports at the beginning of April, which includes South Africa.

Washington also planned a 30% “recipracol” tariff on South African good, but this was paused for 90 days.

Global uncertainty remains over what Trump will do next. 

Fourie said Trump’s tariffs have thrown doubt over lending practices, and Capitec will have to wait to see the economic effects that play out over the coming months.

Inflation/Interest Rate differentials in select economies

No two-pot love

Capitec’s financial results for the 2025 financial year were incredibly strong. The group saw its headline earnings jump by 30% to R13.7 billion, while its ROE jumped from 26% to 29%.

When excluding Avafin, the group’s credit loss ratio dropped from 8.7% in FY24 to 6.9% in FY25 despite the 12% growth in gross loans and advances.

Despite the impressive results, Fourie told BusinessTech that the company did not see any material benefit from introducing the two-pot retirement system.

The two-pot retirement system went live in September 2024 and allows South Africans to access up to one-third of their retirement savings before retirement age.

Ahead of the launch of the new system, many believed that Capitec would be one of the primary beneficiaries as South Africans accessed their retirement savings to pay off their short-term debt.

However, Fourie said the company’s strong financial statements did not show any meaningful change from the two-pot system.

After speaking with Shoprite CEO Pieter Engelbrecht, Fourie believes the two-pot system mainly benefited food retailers.

Not only has the system had minimal impact on Capitec’s results, but Fourie has also been critical of the new system.

Fourie said the new system would hurt retirement outcomes in the long run, arguing that retirement fund members should not withdraw from their savings. 

Not done yet

The latest results mark Fourie’s final full year at the group, as he will retire following the group’s AGM in July.

Fourie has been CEO for 11 years and has been a member of the executive management team for 25 years.

He will be replaced as Group CEO by Graham Lee, who currently heads Capitec’s personal banking division.

After serving the company for nearly three decades, Fourie told BusinessTech that Capitec is in his DNA and will work in an advisory capacity following his retirement from day-to-day operations.