South Africa is home to some of the largest regional and global commercial and financial centres in Cape Town and Johannesburg, with the later hosting the second-highest number of Fortune 500 companies in the MEA region. Richie Santosdiaz, executive economic development advisor (emerging markets), The Fintech Times delves into the country’s fintech development and how it impacts the wider South African economy.
In The Fintech Times: Middle East and Africa (MEA) 2024 Report, Santosdiaz reveals that South Africa boasts a well-developed financial services sector compared to many others in the MEA region, encompassing robust banking and insurance industries, with two-thirds of the population holding a bank account. Interestingly, Johannesburg ranks second only to Dubai in terms of Fortune 500 companies and one big factor for this is its developed insurance sector, which has since spread across the country.
The South African insurance sector commands four-fifths of all premiums written across Africa and ranks among the world’s leaders in insurance penetration. Nonetheless, insurtechs only account for 10 per cent of fintechs in the country.
Economic challenges and success
Additionally, the country stands out not only for its high rate of mobile penetration but also for the widespread adoption of smartphones. Approximately 95 per cent of South Africans own a mobile phone, with smartphones accounting for 91 per cent of all devices in the country.
Despite its economic successes, South Africa grapples with persistent challenges, including poverty, inequality, and political instability. However, the country is actively promoting digitalisation, recognising the potential for fintech to contribute to its development goals. Another priority is also financial inclusion, especially among businesses that are not yet part of the formal ecosystem.
Both financial inclusion and digitalisation are key factors in the country’s economic development strategy: its National Development Plan 2030.
Fintechs in South Africa include insurtechs Naked Insurance and Pineapple, the country’s first P2P insurer, along with banking as a service provider Jumio and digital bank Tyme.
Key Organisations:
■ South African Reserve Bank (SARB) – Country’s central bank
■ Financial Sector Conduct Authority (FSCA) – The financial institutions market conduct regulator
■ Payments Association of South Africa (PASA) – Payment system management body recognised by SARB
■ South African Insurance Association (SAIA) – Representative body of the non-life insurance industry
■ Fintech Association of South Africa (FINASA) – The mission to nurture and empower the thriving fintech ecosystem
Breakdown of Sector:
Timeline of Key Fintech Highlights:
Key statistics of the country:
Read The Fintech Times: Middle East and Africa 2024 report online
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