South Africa’s banking system can do more to support and widen bank financing to small and medium enterprises considered much-needed drivers of economic growth and employment creation, says former FNB CEO Michael Jordaan.
Jordaan, who led South Africa’s oldest bank for 10 years, challenged the banking sector to lend more money to small businesses in order to get them to contribute to the country’s economic growth.
The venture capitalist and co-founder of Bank Zero was speaking about the future of digital banking and telecoms in SA in a Think Big series talk hosted by PSG Konsult on Tuesday.
“I do believe South Africa’s banking system is sophisticated … but more can be done. What I wish I had done more of [while at FNB] was lending more money to the SME sector.”
Jordaan says that while South Africa’s banks are adequately capitalised considering the risks of operating in an emerging market, they generally have their focus on other forms of lending such as home loans, vehicle financing and credit cards.
“Businesses are the ones that really get the economy going; make it easier for small businesses … that would be my single challenge for the South African bank sector,” he says.
Jordaan also spoke about the South Africa’s load shedding crisis, saying that if the country’s biggest energy users rapidly took up solar solutions “we could have better times in six months … [and] not because of government”.
“There is a market solution available for some of the very big power users, and as they then take the demand off the grid, that improves the grid for the people who cannot afford [solar]. It really is a solution that is at our disposal.”
He says fixing the problems at Eskom would be a tough task even for Elon Musk, the South African-born founder of Tesla and SpaceX.
Eskom CEO André de Ruyter resigned in December, citing a lack of support from “the broader political sphere”. During his three-year tenure he faced detractors such as the Black Business Council and the National Union of Metalworkers (Numsa).
“You can only be successful if you’re able to choose the best team around you and if you’re supported by your shareholders,” says Jordaan.
“If that’s not the case, you could put Elon Musk there, he won’t succeed.”
Listen to Ryk van Niekerk’s Be a Better Investor interview with Dr Michael Jordaan (or read the transcript here):
You can also listen to this podcast on iono.fm here.