- Capitec's CEO believes the bank may recover faster than expected from the fallout of the coronavirus pandemic.
- But he also thinks the long-term damage to the local economy may be worse than expected.
- And some nonsensical government regulations are not helping, he says.
- For more articles, go to www.BusinessInsider.co.za.
Capitec's CEO Gerrie Fourie has criticised the South African government’s approach to managing the Covid-19 lockdown – but despite the economic damage wreaked by the pandemic, and those rules, he believes the banking group should do better than expected in the short run.
“Government lost a tremendous opportunity during the crisis to build trust among all South Africans, and unite us behind a single purpose,” Fourie tells Business Insider South Africa.
“They made mistakes with regulations, trying to enforce thousands of rules that are difficult to enforce.”
“Now there are all these thousands of rules that that don’t make sense.”
For example, how is it possible that taxis will be allowed to operate at 100% capacity, but other businesses can’t operate?
“Nobody can justify that rule.”
Another example was instituting a curfew at 21:00 – which was right in the middle of peak dinner service time at restaurants. Government recently changed that to 22:00, after calls from the hospitality industry.
“We need to shift the focus away from rules and regulations, and instead install values and discipline in South Africa,” Fourie says.
The pandemic dealt a large blow to Capitec, which last month warned that its profit for the current half year would decline by more than 70%. In just the three months to the end of May, it suffered a loss of R404 million.
The bank saw a sharp fall in credit demand, while bad debts rocketed. It granted payment breaks to individual clients with outstanding credit of R5.75 billion at the height of the lockdown. Capitec, which bought business-focused Mercantile Bank for more than R3.5 billion last year, also granted repayment extensions of R236 million to businesses.
It predicted that its credit sales would only return to pre-lockdown levels by the start of the next financial year, March 2021.
Capitec’s share price has fallen by almost 40% since the start of March, but Fourie says the banking group should do better than what many people forecast.
However, the longer-term impact on the economy may be worse on businesses that is currently realised, he adds.
“South Africa is still struggling with structural problems, with 20% of the economy still in lockdown.”
No flu means an increase in productivity
Capitec – with around 14 million clients and 14,000 employees – has coped remarkably well under the lockdown restrictions.
In February, when Capitec’s senior team first considered whether its call centre staff could operate from their homes, it was deemed impossible, Fourie says.
Still, when it became clear that a national lockdown was coming, all of the call centre staff had to run operations from their homes across the greater Cape Town and Stellenbosch area, where they still operate almost four months later.
And while there has been a big increase in call centre volumes during the crisis – while fewer people are willing to go to branches – the arrangement has been surprisingly effective, with no noticeable change in output and client service quality, says Fourie. In fact, productivity has increased because of a large drop in absenteeism due to fewer people taking sick leave. Usually, flu season spreads quite quickly among staff this time of year, with hundreds working in the same space. This year, this has not happened.
Connectivity has been a challenge in areas where the signal is bad, but Capitec has given call centre staff devices to strengthen signals.
While the 2,000 employees who operate from Capitec’s brand-new head office just outside Stellenbosch are allowed to go back to the office, only 100 have returned. “People still prefer to work from home,” Fourie said.
This creates new challenges for the CEO, particularly to motivate and inspire people from a distance. “A big portion of work at the office is connecting people, strategising and brain storming.”
Also challenging is trying to grasp how the market is shifting, while not being able to visit the bank’s more than 850 branches and meeting in person with clients and employees in different parts of the country, says Fourie.
What is clear is that there has been a big swing to digitisation, he adds. Many more clients use the bank's app and USSD channel.
There has been a sharp increase in online shopping among clients, but still not enough among lower income clients, says Fourie. “Many South Africans remain cash dependent.”
Fourie has also observed a shift from spending on restaurant and clothing shopping to people upgrading their homes, buying DIY supplies, and spending more on food, as South Africans stuck at home experiment with cooking.
The coming months will be critical for the bank, as its clients are required to resume instalments after repayment breaks.
With government estimating that between 3 and 7 million people could lose their jobs, many may have to default.
(Compiled by Helena Wasserman.)
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