Capitec’s Fourie Calls for Informal Sector Support, Reflects on CEO Tenure
In a recent discussion, outgoing Capitec CEO Gerrie Fourie highlighted the critical role of South Africa’s informal sector in addressing unemployment.Fourie, soon to retire, shared insights on economic growth, banking competition, and his future endeavors.
Unlocking Potential: The Informal Sector’s Key Role
Fourie emphasized that unemployment will not be solved by the formal sector alone. He pointed to Mexico, where the informal market constitutes 55% of the economy, as a model for supporting and growing this sector.
“In South Africa,we need to better understand the informal sector and how to grow it,so we can solve our problems,” Fourie stated. He revealed positive engagements with six ministers, focusing on unlocking potential and fostering economic growth.
Supporting SMMes: A Path to Job Creation
Echoing Fourie’s sentiments,a recent report by the Global Entrepreneurship monitor (GEM) indicated that supporting small and medium-sized enterprises (SMMEs) is crucial for job creation in emerging economies. Fourie insists that fostering entrepreneurship is key.
capitec, which started with a small team, now employs 17,000 people. Fourie believes that policies encouraging entrepreneurs to grow their businesses and employ more people are essential to unlock South Africa’s potential.
Navigating Challenges: from Viceroy to Home Affairs
Fourie reflected on the challenges faced during his 12-year tenure, especially the Viceroy Research report in 2018, which he described as his “darkest day”. The report accused Capitec of predatory lending practices, an attack Fourie viewed as an assault on the bank’s integrity.
Addressing the Department of Home Affairs’s proposed fee increases for ID verification, Fourie supported the move, arguing that market-related fees would enable the department to invest in its systems, rather than burdening taxpayers.
Competition and the future of Banking
Fourie acknowledged the increasingly competitive financial services sector. He noted that banking has evolved substantially since Capitec’s launch in 2001, with a significant portion of the bank’s income now derived from value-added services (VAS) and digital products.
Despite concerns about overcrowding in the banking sector, Fourie stressed the importance of a level playing field from a regulatory standpoint.
Capitec’s Trajectory: Key Metrics and Growth
Capitec has shown remarkable growth under Fourie’s leadership. Consider the following:
| Metric | value | Source |
|---|---|---|
| Employees | 17,000 | capitec |
| Vehicle Loans | Exceeded R1 Billion | moneyweb |
| Market Cap | Nearing FirstRand | Moneyweb |
The Next Chapter: international Expansion and Personal Pursuits
Fourie, who will turn 62 this year, will remain with Capitec for at least another year in a non-executive role, focusing on coaching executives and developing the bank’s international strategy. His focus includes defining Capitec’s approach to overseas markets: whether as a bank, fintech company, or remittance service.
Outside of banking, Fourie plans to dedicate time to conservation efforts at the Gondwana Game Reserve, in which he owns a one-third stake. He also intends to support small businesses and spend more time between his homes in Stellenbosch and Hermanus.
Pro Tip: Diversifying income streams and focusing on value-added services is a key strategy for banks in today’s evolving financial landscape.
Graham Lee, currently heading Capitec’s retail unit, will succeed Fourie on July 19.
Evergreen Insights on Economic Growth and Entrepreneurship
The South African economy faces notable challenges, including high unemployment and inequality. Fourie’s emphasis on the informal sector aligns with global trends recognizing the importance of micro and small enterprises in driving economic growth.
As of 2023,the International Labor Organization (ILO) reports that SMEs account for approximately 90% of businesses worldwide and contribute to over 50% of global employment. Supporting thes enterprises through policy reforms, access to finance, and skills development is crucial for sustainable economic development.
Frequently Asked Questions
-
Why is the informal sector considered critically important for South africa’s economy?
The informal sector provides livelihoods for many South Africans and has the potential to contribute significantly to economic growth and job creation.
-
What is Capitec’s approach to international expansion?
Capitec is exploring various models for international expansion, including operating as a bank, a fintech company, or a remittance service, to determine the most effective strategy.
-
How does Capitec ensure it hires the right people?
Capitec uses psychometric testing and looks for specific leadership traits to ensure a cultural fit and client-centric approach among its employees.
-
What was the impact of the Viceroy Research report on Capitec?
The report was a significant challenge,but Capitec responded by reinforcing its integrity and openness,maintaining stakeholder confidence.
-
What are the key factors for success in the current banking surroundings?
Key factors include regulatory compliance,innovation in digital products and services,and a focus on value-added services to diversify income streams.
What are your thoughts on the role of the informal sector in South Africa’s economy? How can businesses better support entrepreneurship?
