South Africa is licensing their national postal service as a bank, in an effort to increase financial services to excluded and vulnerable populations. Described as an effort at “radical social transformation,” the plans include using the system for payments of social benefits to some 17 million beneficiaries and microfinance applications such as unsecured and small business loans. Plans are to use biometric identification to reduce the risk of fraud. They estimate that the number of adults currently excluded or unbanked is 11% of the population, or 4.3 million adults.
SAPO, the South African postal service, has about 1500 branches, and plans to offer financial services such as credit, savings, and micro-loans to unsecured borrowers. The planned expansion in services was escalated by a recent crisis, when the payment system for the South African Social Security System was threatened with contractual disputes, risking their ability to pay welfare and social benefits.
South Africa’s financial services sector is seen as very conservative and a significant part of the country’s GDP (20%), dominated by the Big Four banks: Standard Bank, First Rand, Barclay’s Africa and Nedbank. SAPO’s Postbank will not directly challenge services being offered by these powerful and well established banks, but will position themselves for development activities with the financially underserved small business owner who needs unsecured small loans, and the unbanked and excluded who can use the infrastructure to establish identify and begin to use financial services. The Postbank has already developed services such as internet banking for the smaller group of beneficiaries who are using their savings program and other daily financial transaction needs. By expanding services to the 17 million who receive government social benefits, the Postbank is in a prime position to offer financial development services to the underserved and excluded.
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