The South African Reserve Bank’s Prudential Authority has published its annual report for 2019/20, showing how the country’s five biggest banks continue to dominate the sector, despite an increase in competition.

According to the SARB, South Africa’s banking sector is dominated by the five largest banks, which collectively held 89.4% of the total banking sector assets as at 31 March 2020 (March 2019: 90.5%).

Local branches of international banks accounted for 7.0% of banking sector assets at the end of March 2020 (March 2019: 5.8%) while other banks represented 3.6% at the end of March 2020 (March 2019: 3.7%).

Total banking sector assets grew by 16.36% year on year, to R6.6 trillion at the end of March 2020 (March 2019: R5.7 trillion).

This was spurred by an increase in gross loans and advances, derivative financial instruments, and investment and trading securities (mainly government securities and other dated securities), the bank said.

The five largest banks in South Africa based on total assets are:

  • Standard Bank
  • FirstRand
  • Absa
  • Nedbank
  • Investec

These banks face competition from smaller players, including Capitec, African Bank, and more recently Discovery Bank, and TymeBank.

The graph below shows the biggest banks by assets, to December 2019.

“The banking sector remained profitable during the period under review, despite a decline in the profitability ratios,” it said. However, it noted that the impact from the Covid-19 outbreak would have a major impact on the data for the 2020/21 period.

Covid-19 impact

“The spread of the coronavirus disease 2019 (Covid-19) across the world has had a major impact on economies and financial systems,” said Reserve Bank governor and PA chairman, Lesetja Kganyago.

“South Africa, like many other countries, responded to the crisis by putting in place various fiscal, monetary and regulatory support measures. A number of prudential policy interventions were issued by the PA covering banks and insurers.

“The relief measures for banks included a reduction in the minimum liquidity and capital requirements. The guidance notes covered accounting issues and the payment of dividends and bonuses by banks.”

The authority said that the depth and duration of the economic downturn from the Covid-19 crisis remains uncertain at this stage.

“This pandemic, accompanied by a slowdown in economic activity, is expected to weaken banks’ risk profiles or risk-weighted assets and reduce bank profitability, which would negatively affect the ability of banks to meet their minimum capital requirements.

“Financial market volatility, together with the reaction of other financial institutions, has also placed pressure on market liquidity and the supply of term funding,” it said.

South Africa’s response has included:

  • A reduction in interest rates;
  • An injection of liquidity into financial markets;
  • Significant regulatory relief for banks; and
  • Several fiscal and tax measures were announced, supporting households and firms.

“Despite significant turbulence in financial markets, these measures have helped stabilise markets, enabling banks to continue to operate by extending credit to support their customers,” the group said, adding that the government-guaranteed loan scheme for small businesses will complement the measures already taken by banks to support their customers during these trying times.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

The Department of Tourism has published a new draft recovery plan, outlining the country’s response to the coronavirus pandemic and how the tourism industry is likely to be impacted over the coming year.

The document is a detailed breakdown of international and local projections for when tourism will likely open up, using modelling that takes into account various infection patterns and recovery scenarios.

South Africa’s projections are predicated on international trends, which modelling shows is likely to open up for travel in a wide window of between August 2020 and May 2021.

Depending on the local spread of Covid-19 and recovery scenarios, South Africa’s tourism could start opening up as early as August 2020 in the best-case scenario, the department said – but in the worst-case, the industry could remain shut until well into 2021.


International travel

The policy document notes that the reopening of international tourism and the country borders will not only be dependent on South Africa’s coronavirus response, but also 44 primary source markets which drive international tourism to the country.

To help model when these countries are likely to reopen, pandemic data for individual countries was sourced and manipulated to obtain the pandemic duration, maximum number of deaths per day, date of peak daily mortality and days since peak daily mortality.

Date of peak daily mortality and peak value had to be determined for each country, and if a country had not yet reached its peak, these were estimated either by extrapolation or by setting a peak number and peak factor.

A linear recovery equation was found for three benchmark countries: South Korea (plateau), China (steep) and the United States (very steep). Gradients and limitations were adjusted to apply more optimistic or pessimistic assumptions and develop alternative scenarios.

Lastly, using China as a benchmark, where it took 60 days to open partially and a further 30 days for full domestic opening, the Oxford Lockdown Stringency Index (LSI) was used to approximate the number of days it would take from the point of recording zero daily deaths to full opening per source country.

Using this data, the department forecasts a global tourism re-opening between August 2020 and early 2021.

“This scenario assumes that the general observed recovery trajectory persists and that progress towards enhanced treatments for Covid-19 by the end of 2020 continue, with an accessible vaccine coming to market by the end of 2021,” the department said.

“Since indications of international border re-openings remain speculative at the time of writing, these dates represent the earliest likely date at which international travel will resume.”

The below model shows the estimated travel periods for South Africa’s primary ‘source countries’  for tourism.

  • The model is set between August 2020 and May 2021;
  • For domestic travel (travel within the respective country), the opening window is set between August 2020 and mid-February 2021;
  • For international travel (to and from the respective country), the opening window is set between November 2020 and May 2021.

Localised and global reinfection 

While the above model provides a positive picture globally, the risk of localised or global reinfection waves continue to threaten the global economic recovery and the strength and consistency of projected recoveries therefore come with low levels of certainty.

“As countries begin the process of re-opening, there remains a strong likelihood that trajectories out of lockdown conditions will prove far more fragile than hoped and that contagion risk in neighbouring countries or regions will force many nations to remain closed off from the world well into 2021,” the department said.

For this reason, the department provided two further global scenarios:

  • A more fragile recovery that contains isolated setbacks and takes longer, but still reflects an extension of the current global trajectory;
  • A prolonged pandemic where the search for a vaccine proves elusive, herd immunity does not successfully contain transmission and multiple re-infection waves result.

Under the first of these scenarios, the timeframe for early Asian/Australasian re-opening moves from July/August 2020 to November 2020, while core markets (the UK, Germany and the US) can only be expected to return after April 2021.

The second scenario paints an even bleaker picture, with international outbound travel from Asia picking up between May and July 2021 and travel from core markets only returning from November 2021.

“In both of the more pessimistic scenarios, the 2020/21 summer season will be seriously affected, with even the following year’s peak months being under threat.

“This will have grave implications for supply-side survival. Given the modelling outputs and qualitative data emerging from the market, however, the stronger international recovery scenario remains the core outlook,” the department said.

It added that containment of the virus ultimately requires effective treatment and vaccine lead times will be a key indicator of the duration of the stabilisation phase.

This will inform visa policies and port of entry protocols as countries without sufficient herd immunity or access to treatment will seek to limit viral vectors, it said.

“In the interim, temporary and semi-permanent restrictions on traveller mobility are inevitable and unlikely to be standardised across markets.

“Measures such as immunity certification, pre- and post-travel quarantine and mandatory visitor tracking will reassure travellers but also impede the visitor experience”


South Africa

The document notes that South Africa’s pandemic curve thus far resembles the ‘plateau’ shape of countries such as South Korea, Australia and Singapore more than it does the ‘exponential growth’ experience of China, Italy, the United Kingdom and the United States.

The implication is therefore that, having successfully ‘flattened the curve’ to prevent health services from being overwhelmed, the country now faces a more prolonged, but less acute battle against the pandemic, the department said.

Using the above model it used for foreign countries, it produced the three following scenarios for South Africa:

  • A strong recovery scenario where South Africa is able to contemplate re-opening in August;
  • A fragile recovery scenario, where the horizon shifts out to November 2020;
  • A low-road, prolonged crisis scenario where the pandemic rages well into 2021.

Citing data from the South African Covid-19 modelling consortium, the department said that the country is on track for a ‘middle-road recovery’.

Under this outlook, South Africa recovers slower than many other parts of the world but does not lag far behind key source markets in Europe and North America.

“It is therefore likely that tourism recovery will experience a number of phases, from hyper-local community attractions, through broader domestic tourism, followed potentially by regional land and air markets, and then the resumption of world-wide international travel,” the department said.

“The implementation of the government’s risk-adjusted strategy is based on sector-level risk assessments that consider transmission risk across a number of dimensions, including; age of workforce, remote working potential, ability to enforce health and safety regulations and travel considerations of employees.”

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

South Africa is still under certain COVID-19 lock-down travel restrictions, and Travelstart South Africa has been kind enough to publish a wealth of information about this on their website. The below information is courtesy of their page.

  • Business Reasons: Any person carrying out work responsibilities or performing any service permitted under Level 3, provided that such person is in possession of a permit issued by the employer
  • Moving to a new place of residence
  • Moving to care for an immediate family member
  • Members of Parliament performing oversight responsibilities
  • Learners and students who are travelling to schools or institutions when they are permitted
  • Attending a funeral
  • Transportation of mortal remains
  • Obtaining medical treatment
  • Persons who are returning to their place of residence from a quarantine or isolation facility
  • Any movement permitted under regulation 41

Please see this link for further details on Disaster Management Act: Regulations: Alert level 3 during Coronavirus COVID-19 lockdown. Domestic passenger air travel is not permitted for recreational, leisure or tourism purposes. All international passenger flights are prohibited except for those flights authorised by the Minister of Transport for the repatriation of South African Nationals from foreign countries and evacuation of foreign nationals from South Africa.

  • Face mask
  • Photo ID – ID Book, South African Driver’s Licence or Passport. Children must have a Birth Certificate or a certified copy of a Birth Certificate no older than 3 months. (This does not need to be an Unabridged Birth Certificate)
  • Copy of E-Ticket AND boarding pass
  • Health Declaration Document from the Department of Health
  • Travel Permit – see forms below

These forms must be completed before your arrival at the airport. Failure to produce the completed forms may result in denied boarding, resulting in your ticket being non-refundable.

Health Declaration
Employer Permit
Student Inter-provincial Travel
Permit to Transport Students
Funeral Attendance
Inter-provincial Relocation

The following airports are open for domestic air travel:

  • Arrive a minimum of 2.5 hours prior to your flight departure.
  • It is recommended that you check in online prior to departure (to minimise contact, queues and waiting time).
  • Only passengers are allowed to enter the airport, no visitors will be allowed entry.
  • Expect maximum safety protocols to be applied throughout your journey.

For a global interactive travel regulations map, visit Travelstart South Africa’s website here.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Lynn Mackenzie, our Immigration Lead, recently had the privilege of interviewing Ola Alokolaro, from Advocaat Law, about Cameroon and Sierra Leone’s immigration landscape. To listen to Lynn and Ola’s conversation about immigration in the current context, click here to view the recording, or view it below.
Ola’s bio Ola Alokolaro is a Senior Partner with Advocaat Law Practice. He studied at the University of Buckingham, England, UK, and holds a master’s degree in Natural Resources Law and Policy from the (Centre for Energy Petroleum Mineral Law and Policy) University of Dundee, Scotland, UK. He has attended several continuing education courses such as The Law firm Partner as Leader at the Cambridge Judge Business School University of Cambridge. He is a member of the Nigerian Bar Association, the Association of International Petroleum Negotiators, and the Nigerian Gas Association. With over twenty years’ experience, Ola advises multinational and indigenous companies on foreign investment law and public policy in Nigeria and other West Africa countries.   He has written several papers which have been published notable amongst which are, “Attracting Foreign Direct Investment to the Solid Minerals sector In Nigeria”; “Co-joined twins- Consolidation in the Oil and Gas industry through Mergers and Acquisitions”; “Treasure Trove -Financing the solid minerals sector in Nigeria”; and “Contracting Issues Under the Emerging Electricity Supply Industry in Nigeria”. We would like to say a huge thank you to Ola for his insights. We hope you enjoy the recording. For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240. Sources: [1], [2]. Image sources: [1], [2].