South African banks and the unbanked: Progress and prospects

Schoombee A. (2004)


Commercial Banks Traditionally do not serve low-income earners, micro-entrepreneurs and the poor (collectively referred to as the unbanked), chiefly because the high costs involved make it unattractive. The big four of South African banking, who between them have a market share in excess of 80 percent (South African Reserve Bank, 2002:4), are no exception in this regard. It is only since the early 1990s that they have given serious thought to entering this market segment, in no small way influenced by the changes in the local political landscape. The new government and its supporters claimed that the big four had backed the racebased policies of the previous regime, demonstrated by their unwillingness to serve, in general, the black community. These banks have been pressurised into rectifying this situation. The emphasis has been on opening up access to their lending facilities in the belief that they have the funding available to meet the pent-up demand for financing in the black community.

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