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Population (millions) |
43.6 |
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Gross domestic savings (% of GDP) |
19.2% |
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% Population under $2/day (PPP) |
15% |
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Regulated microfinance institutions |
Microlenders registered with the MicroFinance Regulatory Council (MFRC), savings and credit cooperatives (SACCOs), and banks with microlending activities. |
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Non-regulated sources of microfinance |
Unregistered microlenders; consumer sales credit; moneylenders |
» More country data from the Microfinance Information Exchange Market
General Approach to Regulating
Based on the Comparative Database on Microfinance Regulation by the IRIS Center of the University of Maryland|
Microlenders |
SACCOs |
Commercial Banks under Banks Act | |
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Definition or description of institution |
Credit-only microfinance institutions who are members of MFRC and comply with their rules |
Closed co-operatives, i.e. financial co-operatives carrying on business with members only |
Universal banks as well as specialized institutions |
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Guidelines & restrictions on financial services |
Max. loan = approx. $1,200 (7,955 ZAR) Max. repayment term = 36 mo. Prohibited: retail or wholesale deposits, retention of bank card & PIN number |
Permitted: accepting funds against shares, savings deposits, term deposits, loans, life and loan insurance. Prohibited: holding member deposits amounting in the aggregate to more than R10million (USD1million). |
Permitted: public deposit-taking; lending Prohibited: unsecured lending; lending against the security of its own shares; issuing no par value shares, preference shares or debt instruments without the Bank Registrar’s permission; issue negotiable certificates of deposit |
» Download Country Profile of Microfinance Regulation
Case Studies
From the paper: Banking the Underserved: New Opportunities for Commercial Banks, Financial Sector Team,
Capitec Bank (Capitec), a small commercial bank started by a group of South African businessmen, made a deliberate decision to focus on the low-income market and has a market-driven, profit-oriented approach to serving this market. Having begun operations in 1999 as a division of the PSG Financial Group, it obtained a retail banking license with the South African Reserve Bank in 2001 and was listed on the Johannesburg Stock Exchange in 2002. Capitec is one of only a few microlenders in
As of November 2004, the bank reports 350,000 loan clients, of whom more than 60,000 have Capitec deposit accounts. As of February 29, 2004 (fiscal year end), the bank had US$22.5 million in net loans outstanding and a return on equity of 11 percent.
In partnership with Mastercard, in 2004 Capitec launched a debit card with an imbedded chip that allows clients to conduct transactions off-line. In addition to rolling this card out to all of its clients, the bank plans to aggressively roll out point-of-service terminals to informal shops around the country. Capitec’s branches are strategically located near key commuter points—along public transportation routes such as railway stations, bus stops, and taxi stands—and its branches remain open from 8 a.m. to 5 p.m., far longer than commercial banks in the country.
Capitec plans to increase its financial leverage through further deposit mobilisation. Throughout the past year, Capitec has rolled out systems that allow the division to upgrade existing branches to operate deposit-taking and lending operations with card-issuing facilities at the rate of 10 to 15 new branches per month. Almost 200 of these branches were operating in mid-2004. The number of ATMs also rose, from 75 to 132, and plans were to expand to 200 ATMs by year-end. In 2003, Capitec mounted a concerted effort to implement low-cost systems to provide savings accounts to low-income earners in addition to short-term loans. Between February and August 2004, the number of savers jumped from 18,104 to 60,856, meeting the bank’s annual target in the first half of the year.
Ithala Bank
Use and Impact of Savings Services among Low Income People in South Africa, 2002
By Sibusiso Moyo, David Musona, Wilfred T. Mbhele and Gerhard Coetzee
This study discusses the vibrant informal finance system in
The study applies Micro Save’s qualitative research methods including focus group discussions using participatory rapid appraisal technique and in-depth interviews with local low income people and Ithala officials.
The study concludes with the identification of 35 products. Some of these include:
- Short term loans from omashonisa (Informal moneylender);
- Cash savings through stokvels- Accumulating Savings and Credit Associations;
- Targeted savings through Ithala;
- Funeral schemes or burial societies.
Bank of South Africa, E Bank
Financial Services for the Urban Poor: South Africa's E Plan, 2003
By Jo Ann Paulson and James McAndrews
This note documents one of the most interesting experiments to come out of recent efforts by the formal sector to provide cost-efficient financial services for the poor. Standard Bank of South Africa created an affiliate, E Bank, in 1993 to deliver basic banking services to the urban poor in South Africa.
In recent years, banks in South Africa have tried to move passbook savings account holders onto card-based accounts that can be accessed from automated teller machines (ATMs) where costs are lower. But because of the high rate of illiteracy the advent of card-based products has proven unsuccessful by many who are illiterate, or who simply prefer a book-based account. E Bank successfully addressed these problems by developing a valuable package of banking products, including new services and greater convenience for the user, while keeping the costs to the bank of providing services under control.
The following case studies can be found in Savings Operations for the Poor: An Operational Guide, edited by Madeline Hirschland, forthcoming from Kumarian Press (1294 Blue Hills Avenue, Bloomfield, CT 06002).
Standard Bank: reaching down and scaling up through technology
Standard Bank, South Africa's largest retail bank, uses staffed ATMs to serve lower-income urban markets previously unserved by South African commercial financial institutions. This service has come to account for over half of its seven million customers. This one-page case describes the service and how it fits into Standard Bank’s overall operations.
Pricing at Teba Bank, South Africa
Teba Bank is a commercial bank for mineworkers in
See also:
Use of Agents in Branchless Banking for the Poor: Rewards, Risks and Regulation. CGAP, 2006.
Use and Impact of Saving Services Among Low Income People in South Africa, 2002, Moyo, S. Musona D, Mbhele, W, and Coetzee, G.
Innovative Approaches to Delivering Microfinance Services: The Case of Capitec Bank, 2003, Coetzee, G.
Reaching the unbanked: Learning from South Africa's FIs. Tracy Kitten, April 2005
How Can Micro Finance Products Reach Out to HIV/AIDS Infected or Affected Communities? 2005. Nayamandi, C.
What Drives Saving in South Africa? 2006, Thomas Harjes and Luca Antonio Ricci.