The South African financial services sector is backed by a sound regulatory and legal framework. These are both infrastructurally sophisticated and boast dozens of domestic and foreign institutions to support activities. This assists in providing a full range of solutions for a wide range of sectors. These include commercial, retail and merchant banking, mortgage lending, as well as insurance, investment and asset management services.
In fact, South Africa ranks 3rd out of 142 countries for financial market development and 2nd for the accountability of its private institutions (WEF Competitiveness Report, 2012–2013). Consequently, the sector has had the potential for substantial development opportunities in both local, continental and global markets (FSSA report, 2018). By channeling savings into investment and credit, the financial services sector plays a key role in growing and transforming the South African economy.
Furthermore, the government’s ambitious reform agenda has focused on strengthening the safety and soundness of financial institutions, as well as improving market conduct, financial inclusion and transformation. Considerable strides have also been made towards combatting financial crime (A safer financial sector to serve South Africa better, 2011). Work will continue into 2020 and beyond in order to build on the substantial progress already made in these areas.
The Cape Town Financial Services Sector
Cape Town’s financial services sector was the largest contributor to GDP in 2016, contributing R43bn, and having experienced relatively consistent growth of 3.8%, on average, over the period 2011 to 2016. It’s not surprising that there now is a large proportion of private investment, asset management, as well as insurance and personal service companies located in Cape Town.
“Too often, Cape Town and the Western Cape are viewed only as leisure destinations. This confirms that we are so much more, and that we mean business. If you are a global investor, you should be considering the Cape now more than ever before.” Tim Harris (Wesgro CEO)
Cape Town is growing from strength to strength as a significant financial services hub in the country. Top insurance companies such as Old Mutual Africa, Santam, Direct Axis, Metropolitan, and Sanlam are headquartered in the Mother City too. Not to mention that renowned investment and financial advisors in Cape Town include Allan Gray, Price Waterhouse Coopers and Investec.
Also based in the city are the top 5 banks in South Africa i.e. First National Bank, ABSA, Standard Bank, Nedbank and Capitec. These all have offices within Cape Town CBD, and have extensive fintech services located throughout the metropolitan too. This provides a comprehensive footprint of financial service providers in Cape Town and the greater Western Cape region.
The Cape Town Financial Sector’s Competitive Advantages
One of the key focus areas for the Department of Economic Development and Tourism and the city of Cape Town is in capturing opportunities in Business Process Outsourcing, and global and middle office Financial Services. Growth in this area and creating an ease of doing business has been supported by a number of competitive factors, including the availability of highly skilled labour at a profitable rate.
This is because the Western Cape is home to several of the country’s top universities, ensuring that there is a pipeline of skills and talent. In fact, the Faculty of Commerce at UCT has a responsibility to address skills deficits and examine the status of recruitment, the working environment, training and development, and tertiary education in South Africa. This has led to the increased competitiveness in financial spheres and academics for the province.
Cape Town is also Africa’s leading technology hub, supporting more than 40 000 jobs (more than double the total of Nairobi and Lagos combined). Growth in the finance, business and business services sector is consistent and will be further stimulated by the increasing percentage of South Africans with access to banking services and the growing middle class, as well as mobile and internet banking.
Cape Town Financial Institutions & Agencies
Institutions and agencies in the Western Cape are financially assisting small, medium and micro-enterprises. Particularly as a vast proportion of the labour force here is employed by small businesses. The province aims to drive continued investment and support in this sector. In fact, there are a number of important main agencies and funding support machines active to support financial services growth and activities in Cape Town. These include the Small Enterprise Finance Agency, Small Enterprise Development Agency, South Africa Black Entrepreneurs Forum, National Empowerment Fund and Industrial Development Corporation.
This drive towards financial inclusion in the Western Cape has provided momentum for the provision and use of regulated financial services nationwide. Particularly by those segments of society where financial services are needed but are either unavailable or inadequate. After all, inclusion enables social and economic development, particularly for low-income people, women, the youth and SMMEs.
Financial service providers in Cape Town are available to, and used by many, South Africans and corporations. Furthermore, they are convenient, affordable, fair and trusted. Contact us today for detailed information about investing in Cape Town’s financial sector!