Week in review - June 24 2007
June 24, 2007
By Edwin Naidu
It comes as no surprise to hear this week that South African banks are charging local consumers more than double the world average in bank charges.
It was also no surprise that two of the big four - Standard and Absa - disagreed with the World Retail Banking Report 2007. First National Bank (FNB) and Nedbank are silent about the report.
The study found that local current account holders are paying R1 863 a year in fees while the global average is about R750. South African consumers are paying more for payment services than their counterparts in almost all other countries.
Standard claimed its customers were paying less than the report indicated, while Absa said it was one of many reports attempting to compare prices.
Neither of their responses make sense, because banks are in the business of ensuring profitability, not philanthropy. That is best left to the likes of Bill Gates and Tokyo Sexwale, although the latter's political motives show he is trying to buy influence rather than be a do-gooder with an obscene bank balance.
Banks exist to make massive profits; they care less about consumers. They graciously dish out bonds, car and personal loans, and credit cards. Skip a payment on any account and their credit control departments will be on your case faster than anyone can imagine.
The number of people who cannot cope with monthly repayments, resulting in judgments and liquidations, is on the increase. Inevitably, the numbers of homes and cars being repossessed as a result are also escalating.
It is hard to imagine banks not making a killing out of their consumers, when one considers South African households owe more on their home loans, car and personal loans, furniture accounts and credit cards than the government has committed to spending on running the country in the current budget.
Last year consumers paid R100 billion in costs and fees to banks. One hopes the Jali commission - probing, among other charges, the penalties charged by banks for using a rival's ATM - comes up with something substantial that the competition authorities will be able to use for the benefit of consumers, who really are being fleeced with a smile.
As new entrants bid to enter the pay broadcasting arena, MultiChoice, the owner of DStv, began a charm offensive on Wednesday, with Smarties, assorted licorice and biltong on the menu for starters, when Nolo Letele, the chief executive, said that while the company was at the mercy of the regulatory authorities, he and his colleagues were optimistic.
He welcomes competition because it will enable the company to focus on what it does best: producing a high-quality bouquet of services for subscribers across the board.
MultiChoice, despite monopolising pay television in the country, has had to bid for a licence as well.
Letele says MultiChoice is positive about its prospects, but competition threats have already resulted in content and rights costs spiralling and staff being poached - possibly leading to a loss in revenue.
But it is braced for a fight. MultiChoice DStv bouquets range from R139 for its low-cost entrant, up to R439 a month.
Telkom Media, with a reported R7 billion to play, is promising consumers a bouquet for R100.
Letele, however, says MultiChoice has no intention of getting into a price war, because it would cheapen the product and make the business difficult to sustain.
Subscribers can look forward to new services, such as movies on demand, exclusive access to high-quality repeats of news and sport, or music on the internet.
With school holidays looming, MultiChoice announced that at the touch of a button, DStv viewers would have access to a variety of games 24 hours a day. The real games, however, begin in November, when licence bidders expect a decision from the Independent Communications Authority of South Africa.
Television viewers will benefit, since competition brings with it choice and higher standards (except at the SABC, which seems to be on a losing streak brought about by its own arrogance). If DStv activates the fast-forward button on its PVR decoder, advertising-free viewing would take some beating.
If half the number of chief executives had the balls of Transnet boss Maria Ramos, many parastatals would be in better shape. Since she moved from the treasury, where she was director-general, Transnet has been getting little wrong.
This is not to say everything is perfect, but Ramos has restored a sense of purpose to the government's utility responsible for operating and controlling major transport infrastructures within South Africa.
This week she announced the sale of its housing loan book to FNB for R1.4 billion, giving the bank a footprint into markets it had previously ignored.
Ramos has made her mark at Transnet with a clear strategy based on four pillars: focusing the business, getting rid of non-core businesses, ensuring corporate governance and developing staff. She's far from done but the sweet, angelic looking Ramos is focused - and tough as nails.
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