The African Angle – Making Financial Services Work for South Africans

The African Angle resizeSouth Africa has one of the most highly developed financial systems on the continent, but a large part of its population still lacks access to or fails to use formal banking services. In the African Angle, author Faith Kiarie explores the reasons for this under-utilization of services, and argues that the government should endeavor to level the playing field.


The number of people with bank accounts in South Africa exceeds that in any other African nation. The World Bank reports that 54 percent of South African adults can conduct financial transactions with banks or similar formal institutions, and the statements of South African banks such as Capitec suggest that this figure is even higher. However, borrowing from these banks is seldom possible. Only 9 percent of South Africans and 25 percent of small- and middle-sized enterprises (SMEs) in South Africa use formal credit. A larger part of the population, approximately 36 percent of adults, makes use of informal credit— borrowing from unregulated loan providers such as private money-lenders, savings clubs, friends, and family. Moreover, even though many South African adults hold bank accounts, there is evidence that many of those accounts are dormant.


This culture of under-banking (the underutilization of mainstream financial services) and reliance on informal credit is curious for a country that has a financial system that rivals those of the developed world.

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The African Angle, an initiative of The Africa-America Institute, Fireside Research, and World Policy Journal, seeks to amplify the voices of contemporary African thought leaders speaking on issues of global concern. The views and opinions expressed in the blogs are those of the authors and do not necessarily reflect the official policy or position of The Africa-America Institute.

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