Financial Inclusion Overview

Financial Inclusion is a central aim of the banking sector, whereby the sector seeks to improve the range, quality and availability of financial services and products focusing on the unserved, under-served and financially excluded. Principles of financial inclusion include; access, affordability, appropriateness, usage, quality, consumer financial education, innovation and diversification, and simplicity.

A number of initiatives launched by the sector are evidence of the banking industry’s commitment to financial inclusion. The Financial Sector Charter (FSC) and the Black Economic Empowerment (BBBEE) Act have been the main pillars of transformation in the sector. Signed in 2003 and implemented in 2004, the FSC is a voluntary transformational charter for the financial sector.

The financial sector in general and the participants (financial institutions) in particular, committed to "actively promoting a transformed, vibrant, and globally competitive financial sector that reflects the demographics of South Africa, and contributing to the establishment of an equitable society by effectively providing accessible financial services to black people and by directing investment into targeted sectors of the economy".

Participants committed to transforming the sector in the areas of:

  • Human Resource Development
  • Procurement of goods and services
  • Access to Financial Services
  • Empowerment Financing (including targeted investments in transformational infrastructure, low-income housing, agricultural development and black SMEs as well as BEE transaction financing)
  • Ownership and Control; and
  • Corporate Social Investment (CSI).

Targets for the first 5-year period were set, and by the end of 2010 the following had been achieved by the banking sector:

  • Access to housing finance - about R65 billion
  • SME Finance - about R16 billion
  • Agricultural Finance - just over R3 billion
  • Transformational Infrastructure - about R12 billion
  • Mzansi accounts totalled 4,6 million    
  • Access of LSM 1-5 to bank branches within a 15km radius was 74,4 percent; and
  • Access to branches and ATMs within 10km radius was 79,2 percent. (FSC target 80 percent of LSM1-5).

According to the Finscope Survey 2012, about 67 percent of adults in South Africa are banked and a total of 72% adults are formally served (banked and have access to formal bank products/services). The Department of Trade and Industry (the dti) gazetted the FSC as the Financial Sector Code (FS Code) in November 2012, however, financial institutions are currently reporting under BBBEE Codes of Good Practice while waiting for the finalisation of the FS Code.

The banking industry sets a target of improving Financial Inclusion in South Africa by raising the current levels of banked individuals from 67% to 70% by 2015. The NDP sets a target for financial inclusion of 90% by 2030. The Banking Association has taken up this challenge by setting up a Financial Inclusion Committee that has agreed on a definition of “Financial Inclusion”, and principles underlying the Financial Inclusion definition. The concept of Financial Inclusion encompasses both individuals and SME’s. Our work plan for the year includes the development of indicators to measure Financial Inclusion. We are collaborating with National Treasury in this work. In addition, to the work plan for the year is the development of an industry strategy for financial inclusion, hosting the Annual Financial Inclusion Indaba, support to co-operatives, co-operative banks, and regulatory issues. The Financial Sector Code includes financial inclusion in the Access to Finance pillar.

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© The Banking Association South Africa 2019