1. Making financial markets work for the poor Presentation on Financial Integration Birchwood Hotel 2 July 2013

2. What we know about the key financial sectors in SADC Banking: in most cases SADC countries are open for business to foreign banks: of course local prudential regulations and competition laws need to be adhered to, Patterns of cross border ownership is spreading with some regional players such as Standard Bank, Standard Charter and Ecobank. More Banks does not equal more inclusion New entrants in the Banking Sector, mobile operators, retail networks are changing the face of banking particularly in developing regions such as SADC,

3. Overwhelming majority of SADC adults (excl. SA) are not formally insured

4. Most SADC adults are unserved by formal insurance However, there is a potential market for retail insurance.

5. Foreign ownership (by number) There is already a significant proportion of cross-border ownership within SADC, abetting the argument for harmonisation in the region.

6. Foreign ownership (by gross written premiums) When considered by premium, the proportion of foreign ownership in SADC insurance markets rises still further. However, the majority of this foreign ownership is from South Africa, whilst there are no foreign SADC insurers operating inside South Africa. South Africa dominates the region’s insurance industry.

7. Microinsurance across SADC Green SADC countries = definitions of microinsurance found in enacted or prospective legislation Yellow SADC countries = no definition of microinsurance found in enacted or prospective legislation

8. What does this mean Given that institutions are already doing business across the region we need to be focusing on : In the short –medium term: Make it easier and more cost effective by harmonising regulations to create a seamless transition from country to country especially in the area of prudential regulation such as banking license requirements. In the longer term we could look forward to multi country banking licenses which implies SADC wide regulators or cross border recognition agreements between based on common regulations.

9. Example of need for harmonisation : Capital requirements The major discrepancies in terms of size, level of development, and prudential requirements are important discussion points within the context of harmonisation.

10. Other cross border financial sector areas requiring attention; Cross border remittances : approx R13 mill ( in low value remittances) crosses SA’s borders to the SADC region 67% goes informally using busses, taxis etc. According to the World Bank this corridor is one of the most expensive in the world. Anti money laundering and Anti terrorism financing regulation are partly responsible for pushing up the cost. Home Affairs regulations ( particularly in SA) exclude undocumented migrants who account for the vast majority of informal remittances, Free Movement of People Enable migrants to access financial services in the country where they find themselves Eg. Allowing the free flow of credit information across borders by enabling regulations to allow this and as a result cross border operations of Credit Bureaus.

11. Making financial markets work for the poor Thank you

12. Contact Dr Prega Ramsamy Email: pregar@finmark.org.za Tel: +27 11 315 9197 Cell: +27 820888162