South Africa´s Banking Industry

South Africa has a well-developed banking industry and you will be able to find an automatic cash machine (ATM) or credit card machine almost anywhere.

Reserve Bank

The Reserve Bank’s mandate is defined in the South African constitution. It is to “protect the value of the currency (the South African Rand) in the interest of balanced and sustainable economic growth” and to consult with the finance minister.Earlier this year there was much speculation about President Jacob Zuma’s government’s plans to change the mandate of the Reserve Bank. Since his appointment of the first woman to the job of South Africa’s Reserve Bank governor, Gill Marcus, his government has largely left the Reserve Bank alone.

Exchange rate

The strength or weakness of the South African rand is a much discussed topic as certain sectors of the country’s economy is heavily reliant on the export market and benefits from a weaker rand. The sentiment also persists that a continuously strong South African Rand will hamper industrial development.The Reserve Bank is also in charge of inflation targeting and, as Marcus explained recently, tailoring their policy to focus on economic growth and job creation. Despite speculation to the contrary, government has recently indicated that it will not relax exchange controls.

Four major banks in South Africa

The four major banks in South Africa are First National Bank, Absa, Nedbank and Standard Bank. All of them offer internet banking facilities and there are also a number of services available that allow for the international sending of money. South African banks are largely allowed to regulate themselves through the Payments Association of South Africa. It has been reported, however, that since the global economic crises in 2009, the South African government and the Reserve Bank have been talking about appointing an independent regulator for the banks.

FICA

The Financial Intelligence Centre Act compels banks to verify the addresses and identities of their clients and also allows them to freeze bank accounts in case of “suspicious activity.” The law is mainly aimed at combating organised crime and racketeering activity. South African finance charges are amongst the highest in the world.

Crime

The rate of financial crime in South Africa is very high and visitors should be especially weary of credit card schemes in restaurants. Criminals are getting more and more creative in their efforts to steal cash machine cards. Always make sure that you have the phone number available where you can stop a card in case of suspicious activity.

National Credit Act

The introduction of the National Credit Act makes it more difficult for people to get into debt and also introduced measures to protect those already in debt. The law also punishes unscrupulous debt providers who make the money they advance unrecoverable in some circumstances. This has led to great reluctance from traditional institutions to grant loans and even bonds. The new credit regime had a devastating effect on car sales in the country, as it was very difficult to get financing. It has however, been reported that the home loan market is slowly recovering and that the sales of cars is also slowly increasing. Debt councillors can, in terms of the act, be appointed to restructure the debt of clients who are heavily indebted.

Loan sharks

Despite these measures, the loan shark business is alive and well in South Africa. Even though recent legislation prevents credit providers from attaching ID-books or bankcards, many abuses still happen at grass roots level.

Registered businesses

It is considered safe to conduct business with a South African company, which has been registered as either a credit provider or a financial services provider with the National Credit Regulator.