Capitec CEO Gerrie Fourie stood his ground when he met a government delegation last week, repeating his assertion that SA’s unemployment rate is much lower than the official data suggests.
Fourie, who has led the expansion of Capitec over the past decade, met the presidency and senior officials from Stats SA and the National Treasury to discuss his comments, reported by Business Day, that the country is not properly accounting for the informal sector.
He said that as a consequence, SA’s jobless rate was inflated, suggesting it could be as low as 10% if the informal sector was fully accounted for, with the Stellenbosch-based bank estimating as many as 3-million informal businesses in SA.
The meeting was attended by minister in the presidency Khumbudzo Ntshavheni and statistician-general Risenga Maluleke.
“Capitec maintains that informal sector activity suggests a lower unemployment rate, though this view is not supported by current survey methodology,” a communique from Stats SA said after the meeting. “Stats SA continues exploring methods to improve labour market measurements, with a focus on data inclusivity.”
Despite divergent views on methodology, the parties agreed the data on informal businesses could be improved, with a register for small-scale and informal businesses put on the table.
A joint statement from the parties said that if implemented the mooted register would complement the quarterly labour force survey and “serve as a valuable sampling frame for improved labour market analysis”.
“We welcome the engagement with the minister in the presidency, the statistician-general and the Treasury, and are committed to working with the government and the private sector to help SA grow,” Fourie said.
“The informal market is vibrant and dynamic, but we believe this growth will only be achieved once the informal economy is properly understood and supported with the right policy frameworks, infrastructure, funding and skills development.”
Fourie’s comments that the official 32.9% jobless rate was not a true reflection of economic activity sharply divided experts, drawing both praise and scorn, with left-leaning economists saying he had to stay in his lane and not opine on matters outside his area of expertise, banking.
Maluleke said the discussions with Capitec’s top brass were “cordial and constructive” and the agency was open to exploring the “development of a statistical register for small-scale and informal businesses”, which he said would strengthen the quality and granularity of labour market data.
The register would also support policy initiatives from the department of small business development, he said.
“We have listened to them [Capitec] and we need to investigate the issues of a statistical register for small business. Stats SA methods remain robust ... We do not fix statistics to feel better about our reality. We reflect that reality so the country can make evidence-based decisions to change it,” Maluleke said.
Capitec, with its 24-million-strong client base, has skin in the game. The lender is targeting the informal sector and small businesses to build its business banking proposition — the next frontier of its growth.
Business Day has seen messages Capitec has been sending to its retail clients whose banking activities suggest they may draw regular income from businesses. They are asked if they currently run a business or have a “side hustle”, so that the lender can “get to know your business better ... this will help us offer you services and support that suit your needs”.
Business purposes
Capitec believes that based on transaction activities, a large chunk of its client base uses their debit accounts for business purposes, because the banking system has traditionally not regarded the informal sector as bankable.
Its moves to grow its market share in business banking has not gone unnoticed by rivals, with small and medium enterprise (SME) banking having emerged as the next battleground in the sector, driven by enhanced digital capabilities at incumbent banks and the entry of non-traditional competitors. Nedbank said in April that key investor concerns included the potential impact of Capitec replicating its retail market successes in the SME market.
According to data from Stats SA, informal sector employment accounted for 19.5% of total employment in the fourth quarter of 2024, cementing its status as the second-largest source of jobs after the formal sector.
The survey of employers and self-employed, which collects information on businesses not registered for VAT, found 1.9-million South Africans were running such businesses in 2023, and that the sector was particularly vital for those with limited formal education.
Capitec prefers to describe this market as “emerging”, and it believes there are as many as3-million such businesses in SA and a further 3-million formal small businesses.
From street vendors to home-based enterprises, informal businesses sustain households, contribute to local economies and reflect the country’s entrepreneurial spirit. As the sector grows, so do the challenges. Limited access to funding and licensing issues remain pressing concerns, according to Stats SA.
The government is proposing to cut costs and red tape associated with business licensing to unlock the potential of small businesses via the country’s first national policy-level guidance on general business licensing in SA.
The end game is to harmonise national, provincial and municipal business licensing to ensure synergy and alignment with regulations and business licensing bylaws.
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