presentation on financial integration
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Presentation on Financial Integration. Birchwood Hotel 2 July 2013. What we know about the key financial sectors in SADC. Banking: in most cases SADC countries are open for business to foreign banks: of course local prudential regulations and competition laws need to be adhered to, - PowerPoint PPT PresentationTRANSCRIPT
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Making financial markets work for the poor
Presentation on Financial Integration
Birchwood Hotel2 July 2013
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What we know about the key financial sectors in SADC
Banking:• in most cases SADC countries are open for business to foreign
banks: of course local prudential regulations and competition laws need to be adhered to,
• Patterns of cross border ownership is spreading with some regional players such as Standard Bank, Standard Charter and Ecobank.
• More Banks does not equal more inclusion
• New entrants in the Banking Sector, mobile operators, retail networks are changing the face of banking particularly in developing regions such as SADC,
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Overwhelming majority of SADC adults (excl. SA) are not formally insured
5.4%
94.6%
0m 20m 40m 60m 80m 100m
Formally insured
Not formally insured
No of adults
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Most SADC adults are unserved by formal insurance
63%
64%
66%
81%
83%
86%
94%
97%
97%
98%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Lesotho (2011)
Namibia (2012)
South Africa (2011)
Zimbabwe (2011)
Swaziland (2011)
Botswana (2009)
Tanzania (2012)
Zambia (2009)
Malawi (2008)
Mozambique (2009)
% of population not currently served by formal insurance
However, there is a potential market for retail insurance.
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Foreign ownership (by number)
5% 10% 12% 18% 21% 23%
45% 50%61%
100%
19%15%
50%62%
9%14%
27%6%
81% 80%
40%27%
73%64%
77%
27%
50%33%
0%10%20%30%40%50%60%70%80%90%
100%
Local
Other foreign
SADC
Prop
ortio
nate
num
ber o
f in
srua
nce
com
pani
es in
per
cent
There is already a significant proportion of cross-border ownership within SADC, abetting the argument for harmonisation in the region.
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Foreign ownership (by gross written premiums)
5% 10% 9%
32%
81%100%
10% 6% 16%
8%
1%
60%
11%
7%
84%
24%
64% 68%
3%
0%10%20%30%40%50%60%70%80%90%
100%
Zambia Tanzania Malawi Namibia Botswana Swaziland
Local
Other foreign
Other SADC
South African
Prop
ortio
nate
prem
ium
s of
in
srua
nce
com
pani
es in
per
cent
• When considered by premium, the proportion of foreign ownership in SADC insurance markets rises still further.
• However, the majority of this foreign ownership is from South Africa, whilst there are no foreign SADC insurers operating inside South Africa.
• South Africa dominates the region’s insurance industry.
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Microinsurance across SADC
Green SADC countries = definitions of microinsurance found in enacted or prospective legislation
Yellow SADC countries = no definition of microinsurance found in enacted or prospective legislation
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What does this mean
Given that institutions are already doing business across the region we need to be focusing on:
• In the short –medium term: Make it easier and more cost effective by harmonising regulations to create a seamless transition from country to country especially in the area of prudential regulation such as banking license requirements .
• In the longer term we could look forward to multi country banking licenses which implies SADC wide regulators or cross border recognition agreements between based on common regulations.
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Example of need for harmonisation : Capital requirements
$0.0m
$0.2m$0.3m $0.3m $0.3m $0.3m
$0.7m
$0.8m$0.8m
$0.4m
$0.0m
$0.2m
$0.5m$0.5m
$1.5m
$2.0m
$0.0m
$0.2m
$0.5m$0.4m
$0.0m
$0.5m
$1.0m
$1.5m
$2.0m
$2.5m
Minimum capital requirements for Non-life (USD, millions)
Minimum capital requirements for Life (USD, millions)
(Proposed) minimum capital requirements for MI (USD, millions)
Angola:USD 6m for Non-lifeUSD 8m for Life
USD
,mill
ions
The major discrepancies in terms of size, level of development, and prudential requirements are important discussion points within the context of harmonisation.
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Other cross border financial sector areas requiring attention;
• Cross border remittances: approx R13 mill ( in low value remittances) crosses SA’s borders to the SADC region 67% goes informally using busses, taxis etc.
• According to the World Bank this corridor is one of the most expensive in the world.
• Anti money laundering and Anti terrorism financing regulation are partly responsible for pushing up the cost.
• Home Affairs regulations ( particularly in SA) exclude undocumented migrants who account for the vast majority of informal remittances, Free Movement of People
• Enable migrants to access financial services in the country where they find themselves
• Eg. Allowing the free flow of credit information across borders by enabling regulations to allow this and as a result cross border operations of Credit Bureaus.
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Making financial markets work for the poor
Thank you