Clement NyirendaA recent research by the South African Competition Commission (SACC) has revealed that major banks in Southern Africa are milking off customers through unjustifiable chunks of high charges. An African Business article about the same research further reports that these banks use complex fee structures to abuse their market power. The inquiry has also found out that there is a distinct lack of competition in the sector and that bank charges are higher than they would be at competitive levels. It has further found out that banks use “information asymmetries and product complexities” to abuse their power.
This comes as no surprise to me. For some time, I have had a feeling that these banks are ripping us off. They have numerous charges most of which we do not even notice. No wonder they make astronomic profits which are not at par with the prevailing economic environment in the region. I, for one, regard banking as a secondary industry. If all of us can agree to keep our monies at home, these banks would be closed down.Therefore, it always pains me when the primary industries such production, agriculture, construction etc are either making marginal profits or registering a string of annual losses up to the point of being closed down while the banking industry makes up to 200% annual profits. And then one banker comes in to say:
most commercial banks in the country are making profits because of their good management and are innovative.
I beg to differ with this fellow.If this was the case, why is it that some equally brilliant managers in other industries fail to register such kinds of profits? And why is that some of the so called innovative bank managers fail to register the same astronomic profits in these other industries after a series of “successful years” in the banking industry.It is high time the Central Banks in the region put in some controls to prevent this kind of monopoly. These banks are killing us because they know that we have no other option apart from them. Akutilima anthuwa (they are “cultivating” us )!
| 3.8 (2 people) |
34 users commented in " Banks milking off clients in Southern Africa! "
Follow-up comment rss or Leave a TrackbackThat is a shame…A lot of banks here will charge a lot for using atms or withdrawing money. I guess it seems logical to them?
TRs last blog post..Should You Continue Your Relationship With an Alcoholic?
Living in South Africa for about 5 years, i noticed this problem of high fees at the all commercial banks in the country! I have banked in other countries in the region their fee rates are not as high as RSA banks for the same services provided. But this trend is spreading to other countries in the region as well!
i think the main force to prevent this is in having a strong consumer associations,which can protect everyone! I am glad to have read the NEws of a new consumer bill in RSA! This will assist so many consumers who are being victimised by the Capatalists! (Eish! That is strong!).
Well other culprits are the Mobile Service Providers (in RSA), there tarrifs are among the highest in the world! (Well I guess that is another story)
What a shame… I think there should come a global bank that was just for the good thing - no fees. no-profit-bank
My SEO Experiments last blog post..My SEO Experiment
Banking sucks in these parts of the world. But even in the Eastern Europe it’s not better. For example in the Czech Republics there are extra fees if you will bring to the bank bigger amount of cash to be deposited on your account without prior 2 day notice.
What? They want extra fee that I brought them bigger load of cash?
Thats exactly right. Great Post
Banking kind of seems like a necessary evil. Why doesn’t a huge global bank just step in and take over the territory with lower rates? Well that’s too bad that you guys are getting bamboozled down there.
Do you mind writing a post about your life in Africa?
You are right, This is new info, Thanks for sharing…
I hate banks and telephone companies… It’s amazing what they get away with.
Banks are a total nightmare and now realise that with everyone living in debt then they can exploit the margins with bank charges and such like. This only preys on the poor who life on a thin line between the black and the red.
The UK is trying to change things, but I doubt they can.
Media Trainings last blog post..Does John McCain have a chance?
This is a shame. I don’t understand how people can sleep at night knowing they are causing such disparity.
Crystals last blog post..Palin As Next In Line? Not in my opinion
I just cant believe this is happening in this place. But also in United states, it happens also but we don’t notice it.
nfl power rankingss last blog post..NFL Point Spread Week 1
You know this is the same everywhere. Regardless of Africa, US, Canada, UK, or anywhere else. Banks are Evil in nature and they just like to suck the lifeline of the poor. If you look at all the world history and the World Wars you’ll see the Banks behind it all …
Bank milking is all the same anywhere else and it’s a very common situation not just in Southern Africa but in Asia as well as other Western countries.
What a ripoff. It’s not as bad in the US, but remember the Savings and Loan scandals of the 80s? You can’t trust banks anymore
NJ Web Designs last blog post..Finding The Right Web Design Business in New Jersey
What a shame…Banks should never do that to their customers.I am glad they are not that bad in China as well.I am sure it will change ,don’t worry ,mate
ah.. this can’t be right..
banks are supposed to safeguard one’s investment..
they oughta go to jail
Why do you think do all, and I mean all banks act this way? This is business here and they will never give up anything for profit by milking people and businesses. I had the same experience so many times and they all act the same.
about capiz blogs last blog post..Captivating Capiz Places to Visit
Join the club, Australia is not much better. The bank charges are horrific compared to North America and Europe - you’ll get charged each time for using a debit card still. I think it is same scenario as you wrote about - lack of hard competition
I live in New Zealand where we have a similar situation where we have high charges placed upon us by the major banks, all the commercial banks bar one in NZ are Australian owned.
2 years the Government started a bank (kiwibank) which in order to attract customers offered much lower fees and interates rates on loans. This in itself has made the commercial banks lower their fees and dramatically improve their service. Competition does work.
englisch übungs last blog post..Heute behandeln wir einige Weisheiten für das tägliche Leben
Good people, from your comments, I see that banks are pickpocketing clients in many parts of the world.At this point in the discussion, solutions to this problem can be outlined as follows:
1)Having strong consumer protection organisations.BTW, do we have a global consumer protection organmisations?
2)A deliberate government intervention. The example from New Zealand is very interesting. I will be extremely happy if Southern African governments can emulate their New Zealand counterparts. Government can also intervene by putting in place fair banking laws.
Keep on sharing your views on this issue.
…
Clement Nyirendas last blog post..Associate Network Consulting Engineers (ANCE) positions at Cisco offices in Southern Africa
we are the only ones who can stop this. without a public boycott, nothing will change. 20twenty, icanonline and most recently PNP go banking have done a good job at competing with the big boys, but lack of support has caused each of these to fold. stop complaining and start acting people…
I actually thought this situation is peculiar to Nigerian banks. It is a shock to note that South Africa is experiencing the same. It is quite depressing to note that a lot of entrepreneurs have suffered greatly from bankers.
I know one businessman who practically went bankrupt. I pointed out to him (before his business collapsed under the burden of unpaid bank interest) that his bankers were exploiting his ignorance and overcharging him. They also gave financial advise that were benefitial to the bank and detrimental to the businessman. Unfortunately, he did not believe me and his business eventually went under.
I totally agree with you that there is no justification for the huge profit being declared by the banking sector while other sectors of the economy are declaring losses. Even an illetrate will understand that there is something fishy in the way the bankers do their businesses.
Unfortunately, the supervisory government agencies are not calling them to other. So each entrepreneur simply have to learn to be “street wise”. Else, it will be a case of “Monkey they work, baboon they chop”.
Nice post buddy, please keep it up.
Banks exist to make profits from your money and putting your money in them involves a risk. These are unhappy facts that a new generation is learning. A pity we couldn’t learn from the past instead.
it is really risky in banking on that part of southern africa
This is only a question of competition. In Germany here most bank accounts are free, some include in addition a free credit card and interest on the surplus in your account.
True is as well, that much more money is available here.
In addition the European Union is lowering money transfer costs. Now most transfers within Eurpean Union are free of charge.
So - just move to Europe …
My experience with banks here is that they are pretty upfront with the consequences for failures on the customer’s part. Sadly, the consequences for those failures (such as bounced checks) involves large fees paid to the bank.
The fees that are associated with using the ATM, letting your balance slip below a certain amount and such are an annoyance, but I don’t know enough about banking to state an opinion on the necessity or lack of necessity for those fees.
charging heavily on the ATM’s withdrawal is really disappointing this will ultimately lead to the loss in the reputation
This blog is excellent. This article reminds me kind of about the US banking market now with the abuses that have gone on far to long.
These big banks need to take accountability , for if they are part to blame for there nations economy , and the economy in the long run falters because of THERE actions both direct and indirect they too will face fiscal woes.
Banks can only survive so long without a good economy and if they crash and burn the very economy that fuels there business they too will crash hard. To use an analogy Its like foresting if you do not plant new tree’s you wont be in business 12 years , 16 years down the line because there will be no more tree’s.
Its sad that these business’s do not foresee the problems they are creating which truly effect all. Its also evident looking at the US banking debacle that there is no such thing as “‘ its only that country’s banking system flunking we do not have to worry “” because the US banking problems have had a ripple effect globally. There is no such thing these days as ” just a small country ” what effects one nation truly effects the entire world.
I am going to add your blog to my blog roll , it is good reading. Sometime in the near future hopefully I will have a social blog to roll out and will add your link there instead but for now I can add this to my other blog.
The problem of milking off clients is not only in Africa. Every bank always has some extra profit from its clients & it’s unstoppable
Yes, there are plenty of other countries having this happen to them as the citizens slowly realize whats going on.
“most commercial banks in the country are making profits because of their good management and are innovative.”
You have to understand that a lot of these “rich” companies try to make every dime possible. For example i went to the fair and they only accepted cash, they knew over 70% of people came with cards, they charged a $4.00 atm fee! There was at least over 10,000 people there…
Things like that couldn’t be surprising if there is not sufficient competition in the market, which means lack of investments, which can also mean protection of certain banking groups by government officials. This problem isn’t only economical, but has certain degree of politics. All in all it depends on government to create auspicious financial climate in the country.
The big banks in the US milk their customers too maybe not as bad but some fees are ridicules.
Please read my comment policy
Leave A Reply