When the FM was first published, agriculture and mining contributed around a third of SA’s GDP, manufacturing and construction about 15%, and services — including financial services — about 50%.
At the time, automated teller machines (ATM) weren’t even a twinkle in the banking world’s eye. In fact, it wasn’t until 1967 that the ATM as we know it was opened at a Barclays branch in Enfield, north of London.
SA had to wait until April 1981 for this miracle of fast banking — 20 seconds for a withdrawal and 60 seconds for a balance inquiry.
It’s probably fitting that its live introduction was as something of a spectacle — at the Rand Show, when Standard Bank’s Autobank machine kicked off the 1980s digital revolution.
Now, 60 years on from 1959, mining and agriculture’s contribution to SA’s GDP has shrunk to just over 10%. Manufacturing and construction have grown slowly to around 20% and services contribute 70% of SA’s output. And there are 37,900 ATMs in SA.
Finance has eclipsed manufacturing and agriculture: its contribution to the economy is more than double the two sectors, combined.
At one extreme, these changes can be seen as a disaster — a woeful tale of "premature deindustrialisation". Indeed, SA’s manufacturing sector is considerably smaller than those of our emerging-market peers.
Or, these changes can be understood as a natural outcome of economic development. As incomes rise, people buy more services.
In SA’s case, this universal pattern was super-charged by remarkable entrepreneurs.
SA has benefited from the talents of several world-class financial minds since the FM first appeared, ranging from the great Sir Donald Gordon at the beginning of the period to our equally great contemporaries including Stephen Koseff, Jacko Maree, Nicky Newton-King, Sizwe Nxasana and Riaan Stassen.
There’s truth in both perspectives.
Arguably, the quality of government policy and regulation is just as important as changes in technology. In many areas of the economy, SA has been stymied by policy paralysis over the past decade.
But finance has benefited a great deal from the excellent quality of regulation it has enjoyed — with only the rarest of exceptions — ever since the Reserve Bank was founded in 1921.
Under the immensely distinguished governor Lesetja Kganyago, the Bank continues to be recognised as one of the world’s leading central banks, and the National Treasury has an equally proud reputation as a policymaker for the financial sector.
Elsewhere in this edition, it’s argued that SA still has a highly concentrated economy, but we banks fight each other hard for every client.
Our banks also hold their own against international peers as investment opportunities in their own right.
The sector is among the best-capitalised and most liquid in the world and, as the International Monetary Fund puts it, a source of economic strength.
It’s hard to shake the banker stereotype — but our sector has transformed and modernised a great deal since the FM first appeared. Looking at Standard Bank as an example, our nonmanagerial and junior management ranks are broadly representative of SA’s demography. Standard Bank’s workforce as a whole is majority female, and 46% of our senior management is black.
The digital transformation has been just as significant.
For instance, Henri de Villiers, at that time CEO of Standard Bank, was profiled in the FM in 1981, sitting proudly next to his huge first-generation PC.
The IT investment challenge De Villiers faced was the need to create an ATM network — a decision that generated immense scepticism and resistance.
These days, and to use Standard Bank as an example again, 99% of the
transactions processed in SA happen on digital channels.
Contrary to what one sometimes reads in the press, the banks are firmly committed to a just transition to the digital economy, and have been investing heavily in their employees, reskilling them for success as digital bankers.
Interestingly, in that same profile from 38 years ago, De Villiers also spoke about Standard’s commitment to employment equity and to addressing structural disadvantage.
Clearly, SA has come a long way since 1986, when UK bank Barclays pulled out of the country on the back of US sanctions against the apartheid government.
Far from the days of isolation, our sector has become multinational.
Standard Bank, for example, now earns about a third of its banking profits in Africa beyond SA. This actually benefits SA: the profit that the sector earns in neighbouring countries and further abroad creates jobs and builds savings here at home.
In summary, the financial sector has benefited from sound and steady regulation that protects consumers and which encourages vibrant and fair competition. It has made innovations in response to changes in demand. It has been disciplined in its internal transformation to better reflect society. It is export-orientated, and has consistently invested in human capital and technology to stay competitive.
Development experts will recognise this as the usual recipe for sustained growth.
Conventional, even boring, but it works.
• Tshabalala is CEO of Standard Bank
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