Latest news with #R1.2-billion
Daily Maverick
19 hours ago
- Business
- Daily Maverick
Nelson Mandela Bay council to decide this week if electricity tariff will rise by 12%
The Nelson Mandela Bay Municipality will vote on the metro's proposed budget, which includes a 12% increase in electricity tariffs — along with rises for other municipal services. The discussion, however, comes as the Electricity and Energy Directorate finds itself in dire financial and governance straits, with funding still not forthcoming for repairs to the high voltage supply line, which provides power to a large part of the city. The Nelson Mandela Bay metro has admitted in its own Integrated Development Plan that it is to present before council this week that electricity outages in the metro are at an all-time high. Yet the budget for the 2025/2026 financial year proposes that consumers pay 12% more for electricity. The plan notes that the Average System Interruption Frequency Index, which measures how often the average customer experiences outages, has reached record levels, primarily due to high-voltage events. These are caused by cable faults, theft and vandalism of fibre cables that trigger unnecessary feeder trips. The document also notes that outages last longer, with forced load reductions worsening reliability indicators. Meanwhile, the metro's Electricity and Energy Directorate is in a financial crisis, operating at a R1.2-billion loss as it struggles to curb illegal connections, vandalism and the collapse of grid infrastructure. One visible example of municipal inaction is the Grogro informal settlement, where illegal electricity connections stretch across Kragga Kamma Road to a substation. These makeshift cables frequently catch fire. In a letter shared with residents, ward councillor Margaret de Andrade wrote, 'My office has engaged in numerous meetings with the relevant departments on this matter, and we have received commitments on several fronts. However, to date, there has been no meaningful feedback or coordinated action. 'As one of your officials previously stated, 'I have forgotten about Grogro'. 'If this sentiment reflects the current level of attention, it is deeply concerning and unacceptable given the gravity of the situation. 'Unrest risk imminent' 'This is no longer just an operational issue — it is a volatile crisis. The community is growing increasingly frustrated due to the lack of visible intervention, and tensions are rising. The risk of unrest, fires and harm to both residents and municipal staff is imminent. 'I strongly urge all departments to urgently coordinate and communicate with one another. We need immediate alignment between Electricity and Energy, Safety and Security, Legal Services, Human Settlements and Disaster Management.' In addition, according to the metro's reports, about 22% of residential electricity meters have been tampered with. In the proposed budget, it is stated: 'As previously reported to Council, it is important to note that the financial position of the Electricity Service is under immense pressure due to the extent of electricity losses, which impact significantly on the financial sustainability of the municipality. This is supported by the fact that the budget for Electricity Bulk Purchases exceeds the total Electricity Service Charges budget. This means that the Electricity Service, which is a Trading Service, is operating at a substantial deficit, requiring support from property rates.' The 12% proposed tariff hike still needs approval by the National Energy Regulator, and if granted, will kick in on 1 July. However, CEO of the Nelson Mandela Bay Business Chamber Denise van Huyssteen said they had not seen the metro's application to Nersa. This is the first year that Nersa will publish all applications on its website; the metro's application also doesn't appear there. Van Huyssteen pointed out that the manufacturing industry was the metro's largest electricity consumer (about 59%) and as a result, organised business in Nelson Mandela Bay would like to have more input on the electricity budget. Van Huyssteen warned that, at the current trajectory, there was a real risk that the municipality might default on its Eskom bulk electricity payments. She noted that if the increase remained capped at 12%, business was unlikely to oppose it. In 2022, the metro led litigation against Nersa, securing a ruling that the general guideline and benchmarking method the regulator had used to determine increases was unconstitutional. The metro argued that the municipality should be required to show Nersa how much it cost to distribute electricity bought from Eskom. Van Huyssteen said programmes such as the geyser control initiative should be reinstated, as it had collapsed. 'We want to add that the municipality needs the urgent support of Eskom to fix its infrastructure,' she said. An additional threat to the metro's electricity security is the temporary repairs to the high-voltage line that collapsed last year. In April, one of the pylons partially collapsed again, damaging the temporary fix. Ward councillors Sean Tappan and Dries van der Westhuyzen said earlier this month that there was now a temporary repair to the temporary repair.
Daily Maverick
3 days ago
- Business
- Daily Maverick
Fact-checking the inaccuracies, half-truths and duplicity in the latest presidential newsletter
President Cyril Ramaphosa's latest newsletter is probably too long for most fellow citizens to make time to read, but it contains so many inaccurate, misleading and downright false statements that unpacking some of them is a worthwhile exercise. In the newsletter, the President refers to a statement made by the US State Department last year, in the context of a climate summit, and quotes the glowing terms from it: 'Last year's country Investment Climate Summit published by the US State Department highlights South Africa being an attractive investment hub, citing key factors such as deep and well-regulated capital markets, strengths in manufacturing stable institutions, an independent judiciary and robust legal sector, respect for the rule of law, a mature financial and services sector, and experienced local partners.' The President does not mention that these words are the work of the Biden administration, since replaced, in January 2025, by the Trump administration. Worse still, he leaves out the following portion of the State Department report for obvious reasons not unrelated to its gloomy and critical content: 'However, South Africa continues to suffer the effects from a 'lost decade' in which economic growth stagnated, hovering at zero percent pre-Covid, largely due to corruption and economic mismanagement, and a slow economic rebound post-Covid amid endemic logistics and energy crises. One of the biggest challenges to investment is persistent 'load shedding', South Africa's term for nationwide scheduled rolling blackouts. 'Other challenges include policy uncertainty, lack of regulatory oversight and enforcement, state-owned enterprise (SOE) drain on the fiscus, corruption, violent crime, labor unrest, lack of basic infrastructure and government service delivery, and lack of skilled labor. 'Moody's, Fitch, and S&P have affirmed South Africa's credit rating as stable but rate South Africa's sovereign debt as sub-investment grade. In February 2023, the Financial Action Task Force listed South Africa as a jurisdiction under increased monitoring, known as the 'grey list', to address deficiencies in its regime to counter money laundering and terrorist financing (AML/CFT). South Africa will remain under increased monitoring until it completes its action plan to strengthen its AML/CFT regime.' SA remains on that grey list and will likely languish there until necessary reforms to the criminal justice administration, needed to capacitate it to counter money laundering and terrorist financing, are effected. The Ramaphosa administration shows no urgency in this regard, despite the fact that while SA is on the grey list, borrowing (currently at an all-time high) will remain prohibitively expensive. SA services its debt at present at a cost of R1.2-billion a week, an amount the taxpayers can ill afford. Rule of law Ramaphosa suggests that his government shows fealty to the rule of law. He does not mention the recent trenchant criticism by Bonang Mohale, chancellor of the University of the Free State: 'The great problem for South Africa is rampant greed. [It] is essentially a problem for the once glorious African National Congress that has morphed into an organised crime syndicate, primarily because for a solid 30 years of our democracy, they held the absolute majority power in everything that matters.' 'Organised crime syndicates' by definition show no discernible regard for the rule of law. Fealty to the rule of law implies respect for property rights; indeed, that respect is built into the definition of the rule of law favoured by the World Justice Project. At the most basic level, it entails that: ' The rule of law ensures property rights by providing a framework of laws, institutions, and community commitment that protects those rights. It guarantees that everyone has the right to own property, both individually and collectively, and that no one can be arbitrarily deprived of their property. This framework also ensures that if property is taken, it is done in accordance with the law and with just compensation.' The abomination that is the new Expropriation Act envisages expropriation with nil compensation. The Constitution envisages 'just and equitable compensation' upon expropriation in section 25 of the Bill of Rights. The nil compensation does not have to be just and equitable on any reasonable interpretation of the new law. This renders it unconstitutional. It also exposes the government's lack of appreciation of the meaning of the rule of law. The Constitution itself regards the rule of law as supreme. Any attempt to dilute the rule of law has to have a 75% majority vote in Parliament, not the simple majority that passed the Expropriation Act. Independent judiciary Ramaphosa claims that there is an independent judiciary in SA. Has he forgotten the evidence he gave before the Zondo Commission of Inquiry into State Capture? There he revealed that the Bench in SA is regarded by the ANC as a site of cadre deployment. There is no better way to capture a judiciary than to deploy loyal cadres to serve on it. That is the death knell of independence. This ambiguous passage appears in the newsletter: 'President Trump agreed that the US should continue playing a key role in the G20, including attending the G20 Leaders' Summit in Johannesburg later this year, where South Africa will hand over the presidency of the G20 to the US.' Does Ramaphosa mean that Donald Trump is coming to the wreckage of Johannesburg later this year, or merely that the US will continue playing its key role in the G20 by sending a representative to Johannesburg? The answer is anyone's guess. Time will tell. There is more Orwellian doublespeak in this presidential observation: 'We were able to update US officials on the ongoing structural reform process underway to improve the ease of doing business and facilitate a favourable investment climate.' Every cautious would-be investor is acutely aware of the high violent crime levels in SA and also regards the rampant corruption, about which Bonang Mohale waxes so eloquent, as reasons to avoid making new investments in SA. Crime and corruption remain at unacceptably high levels and not enough is being done to address these barriers to new investment from which new jobs will flow. As long ago as 2011 the Constitutional Court ordered that a single body outside of the control of the executive (which Ramaphosa now heads) should be established to deal with corruption. No such body has been set up 14 years later. The binding nature of the court findings and the legal need to implement the criteria it set are ignored by a government that is content to allow State Capture, tenderpreneurism and the cosy type of comprador-capitalism that BEE laws and regulations have created (this despite recent polling that indicates that more than four in five of the SA population favour merit appointments over race quotas.) There is simply no political will to implement the 2011 judgment properly. This attitude is not indicative of fealty to the rule of law, nor of any real desire to create an investor friendly climate in SA. A great deal of new investment is necessary to attain secure peace, sustainable development on the embattled economic front and shared prosperity in which those genuinely previously disadvantaged enjoy the fruits of their currently hollow liberation. Progress bedevilled Before the formation of the Government of National Unity (GNU), the ANC and its tripartite alliance partners, the SACP and Cosatu, ruled the roost and created the BEE architecture that has so bedevilled progress in SA. The laws and policies in place have been trenchantly criticised by Professor William Gumede, but they are persisted in by the ANC element of the GNU. By now it ought to be screamingly apparent to any sentient observer that the BEE system has not served the constitutional purpose for which it was intended. The provisions of section 9 of the Bill of Rights contemplate redress via legislative and other measures designed to protect or advance persons or categories of persons disadvantaged by unfair discrimination. All that BEE has in fact achieved is the enrichment of ANC cadres and their friends in business. Those genuinely disadvantaged continue to languish in poverty. This fact is illustrated by the increase in the Gini Index, which is now the highest in the world among the 130 countries that produce a Gini Index and considerably higher than it was in SA when democracy dawned. The BEE system does not properly serve the purpose for which it was created. It should be scrapped in favour of the economic empowerment for the disadvantaged — the EED system proposed by the SA Institute of Race Relations. Whether the GNU will be able to break the shackles on progress that is in place due to the ANC fealty to its National Democratic Revolution (NDR) remains to be seen. The NDR is deeply and darkly inconsistent with constitutional principles, but the abandonment of the NDR would not suit that 'organised crime syndicate' to which Mohale refers. The private member's Bills introduced by the co-chair of the Justice Portfolio Committee, Glynnis Breytenbach, envisaging a new Chapter Nine Anti-Corruption Commission that will be set up in a constitutionally compliant way to deal with corruption, are currently undergoing processing in the parliamentary back office. Before the GNU dawned, Breytenbach was the DA's shadow minister of justice. Before that, she was a senior prosecutor, and she knows the National Prosecuting Authority inside out. Her suggested reforms deserve accelerated parliamentary debate and consideration. The DA and AfriForum have separately challenged the constitutionality of the Expropriation Act in litigation currently pending. New BEE regulations are similarly being challenged for want of constitutionality, also by the DA. There is furthermore a plethora of constitutional litigation around the National Health Insurance legislation. If the government that Ramaphosa leads was true to the clear intentions of the Constitution and showed greater fealty to the rule of law, these litigious efforts would be unnecessary, the criticisms would be taken to heart, the State Department's reservations recorded above, but omitted from his latest newsletter, would be taken more seriously and would be acted upon rather than omitted from the newsletter. DM
The Citizen
23-05-2025
- Business
- The Citizen
Progress made in metro's efforts to clean house
The Tshwane metro has intensified its efforts to rebuild institutional integrity and restore financial discipline through strong consequence management and a transparent approach to resolving wage disputes. Tshwane Mayor Dr Nasiphi Moya recently conveyed that the Labour Court ruled in favour of the metro's exemption from implementing a 5.4% increase. It sent the matter of a 3.5% increase for the 2021/22 financial year back to the South African Local Government Bargaining Council (SALGBC) for reconsideration. Moya provided a six-month progress report on the work of the multiparty coalition government at Tshwane House on May 22. The metro held a meeting with Samwu and Imatu, the two recognised municipal unions, in response to the ruling. Although the unions expressed disappointment over the ruling on the 5.4% increase and reserved the right to appeal, all parties agreed to pursue mediation through the CCMA under Section 150 of the Labour Relations Act. 'This mediation process offers the best chance to reach a fair and sustainable outcome for our employees while maintaining the metro's financial stability,' said Moya. She commended both unions for engaging in open and transparent dialogue in the interest of Tshwane's workforce and uninterrupted service delivery. Moya also highlighted the metro's accelerated progress in addressing unauthorised, irregular, fruitless, and wasteful (UIFW) expenditure, an issue that has plagued the municipality's governance for years. The metro has completed investigations into R11.7-billion UIFW expenditure, with another R1-billion expected to be finalised before the end of the 2024/25 financial year. LISTEN: She said this marks a dramatic increase from the R1.2-billion investigated in the previous financial year. The metro has also recorded notable progress in disciplinary and legal actions: – 349 officials have been flagged for disciplinary proceedings (up from 126 in February 2025) – 44 cases have been referred for criminal prosecution. – More than 900 cases are now before the Financial Disciplinary Board, an enormous jump from just 70 cases earlier this year. – 85 officials have been dismissed, involving serious offences including sexual harassment, fraud, corruption, bribery, and dereliction of duty. Moya said five officials have been served letters of intention to suspend over mismanagement of the Refilwe and Cullinan stadiums, and a former Section 79 Chairperson has been referred to the Speaker for violating procurement policies. 'The metro is also moving to blacklist eight non-performing contractors, although delivery of formal notices has been challenging due to vacated premises.' Legal advice has prompted the metro to pursue blacklisting in absentia, which signalled a no-tolerance to underperformance and fraud. Moya said R36-million has been allocated in the new budget to Group Audit and Risk for forensic investigations to reinforce the metro's anti-corruption drive. 'These actions show that we are not merely making promises, but acting decisively to clean up governance, build public trust, and restore pride in the administration of our Capital City,' she said. ALSO READ: Toddler finally laid to rest after 8 months in government mortuary Do you have more information about the story? Please send us an email to bennittb@ or phone us on 083 625 4114. For free breaking and community news, visit Rekord's websites: Rekord East For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
Daily Maverick
15-05-2025
- Business
- Daily Maverick
PIC's Daybreak disaster shows that remedies without accountability won't work
Few institutions hold sway over South Africa's economic future quite like the PIC. Managing nearly R2.7-trillion in assets – mostly on behalf of government employees and social security funds – the PIC isn't just South Africa's largest asset manager. It's also a lightning rod for controversy, especially when investments designed to transform society go sideways. The PIC's 2024 integrated annual report paints a picture of an organisation committed to transformation and social impact through responsible investing. It boasts that R2.369-trillion of its assets come from the Government Employees Pension Fund (GEPF), and another R149.6-billion and R59-billion from the Unemployment Insurance Fund (UIF) and Compensation Fund, respectively. Counting eggs But behind the glossy values and ESG buzzwords lies a troubling pattern: heavy exposure to politically connected individuals and underperforming entities. The Mpati Commission, formally known as the Judicial Commission of Inquiry into Allegations of Impropriety at the Public Investment Corporation (PIC), was established in 2018 to investigate claims of corruption, political interference and governance failures at the PIC. Chaired by former Supreme Court of Appeal president Justice Lex Mpati, the inquiry exposed a pattern of dubious investments, poor oversight and undue influence over decisions involving billions in public funds. Most alarming, according to the commission, was the PIC's R1.85-billion exposure to Matome Maponya-linked businesses – including a R1.2-billion deal in 2015 to fund the Afpo Consortium's acquisition of Afgri Poultry, later renamed Daybreak Foods. The commission's final report, delivered in 2020, made 243 recommendations to clean up the institution and restore accountability. That poultry business is now close to going bust. Early rot By 2016, a PIC-seconded CEO described Daybreak as 'technically insolvent' and flagged that the R1.2-billion paid for the business was likely to be a dramatic overvaluation. Despite this, the PIC continued to inject support over the years – even as internal tensions, mismanagement and poor financial oversight persisted. Fast forward to 2023: a new CEO, Richard Manzini, launches a restructuring plan, aims to boost controls and secures PIC approval for a R250-million facility to upgrade infrastructure and stabilise operations. But in a twist emblematic of public sector inefficiency, the PIC delayed the disbursement. By early 2025, only R176-million had trickled in – too little, too late. Manzini and other executives resigned in protest. By April, the situation had become catastrophic: salaries went unpaid, feed deliveries stopped and thousands of chickens starved to death. Chairperson payout as Daybreak burns Bojane Segooa, the now-former board chair of Daybreak Farms, exited the crisis-hit company in a blaze of scandal last weekend. After reportedly demanding R1.2-million in board fees – and allegedly clashing with CFO Aubrey Dali, who refused to authorise the payment – Segooa walked away with a R625,000 golden handshake. What other positions has Segooa held? Segooa is no corporate novice. Her track record includes significant roles in both public and private sector boardrooms. She holds or has held influential board seats at some of South Africa's largest investment and infrastructure entities: RH Bophelo (JSE-listed healthcare investment firm): Oversaw a cross-listing on the Rwanda Stock Exchange, helped grow NAV from R647-million to R863-million, and drove a 79% increase in investment income. Pushed for gender pay equity and elevated BEE status from level 6 to level 1. PereSec Prime Brokers (Pty) Ltd (SA's largest stockbroking firm): First chairperson of the Audit and Risk Committee, established governance frameworks aligned with King IV, and initiated transformation measures, including the appointment of African female ARC members. Broadband Infraco (state-owned broadband operator): Contributed to a strategy securing a R2-billion strategic asset, oversaw R500-million in infrastructure upgrades and ring-fenced R100-million in procurement spend for African female entrepreneurs. Sources describe her exit as 'strategic abandonment.' She left a gutted company where some 3,400 employees have not been paid, retirement contributions are missing and starving chickens made headlines after the Gauteng Division of the High Court in Johannesburg ordered an immediate halt to their mistreatment. As of May 2025, more than R1.44-billion in public funds are at risk in Daybreak alone. The 2024 annual report shows the PIC's portfolio delivered a modest 3.6% growth, with assets under management rising from R2.6-trillion to R2.69 trillion. But, these aggregate numbers mask serious exposure risks. Risky business PIC's portfolio is fraught with risks. The top 10 investments, when scrutinised for transparency and risk profile, reveal significant vulnerabilities. Among the disclosed investments, Eskom bonds top the list with an exposure estimate of R83-billion. This high-risk investment is plagued by Eskom's ongoing debt crisis. Similarly, Transnet debt, once in default and now recently settled, stands at R4.7-billion, with future re-entry anticipated. Daybreak Foods, currently in turmoil, represents an unlisted equity exposure of R1.44-billion, exacerbated by an additional R250-million in emergency funds. Investments in African Bank and the SA SME Fund also present their own challenges, with exposure estimates of approximately R3.6-billion and R2-billion, respectively. Undisclosed, not unnoticed The undisclosed exposures, based on estimates or incomplete public information, add another layer of uncertainty. Investments such as Lanseria Airport, undergoing performance review, and flagship assets like the V&A Waterfront and Mall of Cyprus (via Pareto), remain opaque. Stakes in venture capital firms such as IDF Capital and Fireball Capital, estimated at R175-million and R250-million, respectively, target high-growth tech sectors but also come with substantial risk. A hard limit to assessing risk is that the PIC has been less transparent about its private equity and offshore real estate investments compared with its bond and infrastructure holdings. This lack of disclosure makes it susceptible to political influence and instability. Redemption deferred PIC CEO Abel Sithole and board chair David Masondo have been quick to affirm that the state asset manager has turned a corner. Of the 243 recommendations handed down by the Mpati Commission, 242 have reportedly been implemented. Governance structures have been reinforced, risk committees recalibrated and the PIC even posted a R141-million dividend to the state – evidence, say executives, of an institution on the mend. That leadership baton is now being passed on. On 15 May 2025, the PIC confirmed the appointment of former Development Bank of Southern Africa CEO Patrick Dlamini as its next chief executive, effective July 2025. Endorsed by the Cabinet, Dlamini steps into one of the most powerful roles in South African finance – at the helm of the country's largest equities investor – with a mandate to restore credibility and deepen transformation. His arrival signals continuity in strategy, but also intensifies public expectations of stronger accountability. But Daybreak's collapse suggests the rot isn't just about compliance – it's about consequence. If nearly R1.5-billion can disappear into a black hole of mismanagement, politically connected deals and ignored red flags, then the risk to the public purse isn't procedural. It's systemic. What the Mpati Commission diagnosed was institutional capture through relationships and influence. What Daybreak reveals is how little that diagnosis means if no one is held to account.
Daily Maverick
01-05-2025
- Business
- Daily Maverick
SMME Focus: How SA banks are rethinking SMME finance in a cash-first economy
Cash is still king in South Africa's informal economy, and banks are not pretending otherwise. Lenders are starting to rewrite the rules of engagement when it comes to the country's spaza shops and township traders. South Africa's small, medium and micro enterprises (SMMEs) are punching well above their weight. They contribute to around 34% of GDP and employ roughly 60% of the labour force, according to the Banking Association of South Africa. Regardless of their economic muscle, SMMEs – especially those in townships and the informal sector – remain financial outsiders. The formal banking system often misses the mark in a country where cash is still the currency of trust. 'In the battle between cards and mobile money, who is winning? Cash. I think cash is still winning,' said Wiza Jalakasi, director of African expansion at payments partner, EBANX. The R5-trillion sector running on rands and cents The MSME (micro, small, medium enterprises) sector has an estimated turnover of R5,29-trillion, with 72% of SMMEs operating informally and remaining largely cash driven, according to FinScope's MSME 2024 survey. Townships and rural SMMEs often exist outside the formal banking system, leaving them vulnerable to theft, limited growth and a lack of credit history. 'Physical cash being handed to a merchant and being translated into a digital currency or an instant deposit into a transaction account – that makes businesses work,' said Chris Wood, Absa's executive of product. '[Banks] have got to be sitting there at the crossroads.' South Africa's banks are showing up to that intersection. But rather than forcing SMMEs to go digital, they're starting by meeting SMMEs where they are. Lending on a swipe At Capitec's annual financial results presentation this week, the company's CEO, Gerrie Fourie, said the bank sees huge potential in the informal market. 'There's about 3 million spaza shops out there, 70% of them in the informal market. How do we capture that market and actually unlock the potential in South Africa?' Capitec's solution analyses a business's daily takings and tailors credit accordingly. 'We say you need to look at the cash flows. They haven't got assets,' Fourie said. 'So you need to lend against the cash flow. And that's the model we've built.' Capitec's dynamic loan model deducts payments as a fixed percentage of a merchant's inflows – whether from cash, card, or EFT. '[The customer] repays his loan as their business is performing,' he said. In a year, the bank's small business base has more than doubled from 28,000 to 63,000. It has also issued more than R1.2-billion in scored loans to small businesses. The card machine cartel A major barrier to digital inclusion is the hardware itself. Traditional card machine rental models, costing around R500 a month, are out of reach for micro enterprises. Fourie noted that Capitec has shifted towards a model where businesses can buy a device from R1,499. 'I think the rental model is ridiculous,' Fourie told Daily Maverick. 'The average rent is just below R500. If you buy your machine it's R2,000. So in four months, you've repaid (the cost of) your machine.' Competitors such as Yoco offer similar hardware from as little as R750. Although, it isn't just upfront costs that need to be considered. Transaction commission fees typically range between 2% and 3.5% per sale, depending on the provider, which adds up quickly for high turnover, low margin businesses. Tap, type, swipe For banks such as Absa, getting merchants online means giving them options. 'We've got to make sure that where our merchants are, they are able to accept more,' Wood said. 'It could be QR codes, it could be pay by link. And that includes cash,' Wood said. 'That convergence of physical cash and what would always typically have been a merchant card machine, is getting closer and closer.' The real banking role is systemic: getting cash safely back into the banking system. 'We want to make cash safe and make sure our customers are getting that cash into their transactional accounts sooner,' Wood said. The SMME arms race Across the sector, banks are rushing to build trust and relevance with SMMEs. Standard Bank has launched a township entrepreneur initiative, focused on financial literacy and tailored products. Nedbank, named South Africa's Best SME Bank in 2024, now supports more than half a million businesses through digital tools and a free business development platform. Meanwhile, FirstRand Bank secured a $150-million (about R2.8-billion) loan from the International Finance Corporation (IFC), earmarked for SMME lending, particularly for women-owned businesses. FNB announced on 24 April that it is strengthening its lending muscle with more than R4-billion in SMME-lending capacity through two funding streams: a R1.8-billion risk-sharing facility, backed by the International Finance Corporation (IFC) and the EU; and a R2.5-billion social bond issued by FirstRand Bank. The funds will target women-owned businesses and rural sectors such as agriculture and healthcare. What this means for you as a small business owner Banks are starting to speak the language of small businesses. By offering services such as cheaper card machines, loans based on a business's daily takings, and converting cash into credit history, the tide is turning towards financial tools that work in practice and not just on paper. Teaming up to bridge the gap To close the IFC's estimated $30-billion (R550-billion) SMME financing gap, banks are teaming up with fintech players. A notable alliance is Mastercard's partnership with Johannesburg-based Sava, which provides small businesses with digital bank accounts and expense-tracking tools. This hybrid model could help informal businesses become creditworthy. 'Consumers are getting more and more comfortable with the way we're doing digital payments,' said Meagan Rabe, Visa's senior director for sub-Saharan Africa fintech. 'In South Africa specifically, 70% of consumers are wanting to be digital.' That shift is already playing out in numbers – at Capitec, at least. 'When we started 20 years ago, 80% of our transactions were cash and 20% was electronic. Now we're 13% cash and 87% card,' Fourie said. The Reserve Bank, he added, is also laying the groundwork for a more digital economy, taking cues from countries such as India and Brazil. DM
