An application of the extended Technology Acceptance Model in understanding technology-enabled financial service adoption in South Africa

The last 10 years have seen a significant increase in the provision of consumer services through technology. Computers, mobile phones, the Internet and self-service kiosks are examples of technology platforms that have enabled services to be offered to consumers in new ways. In South Africa, technology-enabled financial services have the potential to expand financial inclusion, especially at the bottom of the pyramid. There is a need to understand how consumers adopt technology-enabled services. Using grounded theory, an enhancement to the Technology Acceptance Model is proposed and developed to explain adoption of technology-enabled financial services. Confirmatory factor analysis is used to validate the model against data obtained from a survey. The proposed model fits the data well. Implications of the model are discussed.     

Giving Credit where it's Due: Promoting Financial Inclusion through Quality Credit Unions

Early in 2005, HM Treasury established a Financial Inclusion Task Fund to support initiatives to tackle financial exclusion. It envisages that a substantial proportion of this funding will be allocated to third sector lenders such as credit unions operating in low-income areas. During the 1980s and early 1990s, public investment in credit unions was misdirected. This resulted in community credit unions remaining small and having only marginal impact within financially excluded communities. Since 1999, significant transformation has taken place in the credit union sector, which has resulted in credit unions developing as market-oriented and commercial social enterprises with a capacity to tackle financial exclusion both imaginatively and effectively at a borough wide, city-wide and sometimes county wide level.     

The socio-economic differences between landfill and street waste pickers in the Free State province of South Africa

Waste picking is an important survival strategy of many people throughout the developing world. South Africa has a sizeable waste picker population who ply their trade on municipal landfill sites as well as on the streets of cities and towns. This study lifts the lid on this neglected area of research by analysing and comparing landfill and street waste pickers side by side in a socio-economic context. Samples of waste pickers were drawn from the three main municipalities of Mangaung, Matjhabeng and Metsimaholo in the Free State province of South Africa and a questionnaire-based survey was conducted. Among the findings was that waste picking offers a financial lifeline when, due to inadequate schooling and grinding poverty, individuals would be hard pressed to find employment in the formal economy. The study lays an important foundation for further comparative and qualitative research into this important segment of South Africa’s informal economy.     

A detailed decomposition analysis of the public-private sector wage gap in South Africa

The present study examines the public-private sector wage gap in South Africa using individual cross-sectional data for 2000–14. Results from unconditional quantile regressions and generalised Oaxaca–Blinder type decompositions show that the wage gap is an inverted-U shape across the wage distribution. The ‘composition effect’ is more important than the ‘price effect’ at the bottom of the distribution while the opposite applies at the top. Key factors underpinning the ‘composition effect’ are unionisation, industry of employment and education, while those associated with the ‘price effect’ are education, race and occupation.     

The Child Support Grant and teenage childbearing in South Africa

This paper examines data on teenage fertility and patterns of uptake of the Child Support Grant in South Africa from 1998 to 2005, to assess how far this Grant is associated with the trend in teenage childbearing. Teenage fertility was fairly high during the 1980s when state financial assistance to teenage mothers did not adequately serve the majority of South Africans. Since the first half of the 1990s, however, teenage fertility has steadily declined. This trend was already underway when the grant was expanded in 1998 to reach beneficiaries in all sub-groups of the national population. If teenage girls were having children primarily to benefit from the Child Support Grant, then more would be making claims than is in fact the case. The findings of this study do not suggest any significant positive association between the grant and the trend in teenage childbearing in South Africa during the past decade.     

Measuring the Financial Cycle in South Africa

We measure the financial cycle of South Africa using three different methodologies. The financial cycle is identified using credit, house prices and equity prices as indicators, and estimated using traditional turning-point analysis, frequency-based filters and an unobserved components model-based approach. We then consider the financial cycle’s main characteristics and examine its relationships with the business cycle. We confirm the presence of a financial cycle in South Africa that has a longer duration and a larger amplitude than the traditional business cycle. Developments in measures of credit and house prices are important indicators of the financial cycle, although the case for including equity prices in the measures is less certain. Periods where financial conditions are stressed are associated with peaks in the financial cycle, suggesting that the estimated financial cycle may have similar leading indicator properties to financial conditions or stress indices.     

Financial remoteness and the net external position

This paper shows that financially remote countries exhibit more positive net external positions, hence hinting at external funding problems for more remote countries. This finding is found to be stronger for emerging and developing countries. However, being located near financially very open countries, being in currency unions with creditor countries, or being highly integrated through financial and trade linkages with a ‘core’ country facilitates net external borrowing. We also find evidence that remoteness affects primarily the gross liability side of the external balance sheet and has a stronger impact on the net equity position than on the net debt position. Consequently, the paper demonstrates the important role of geographic and bilateral factors for a country’s net external wealth.     

Successful SMEs in South Africa: The case of clothing producers in the Witwatersrand

The objective in this article is to examine the key determinants of successful SME development in post-apartheid South Africa. The determinants of successful SME growth are investigated by concentrating upon one specific branch of manufacturing, namely clothing production in the Witwatersrand. The article unfolds through four sets of material. First, a review is undertaken of research concerning the factors influencing successful SMEs in sub-Saharan Africa. Major themes are the elements of successful individual enterprise, successful clusters of enterprises and of available research in South Africa. In section two, attention turns to the case study and outlines key features of the development of the South African clothing industry. Section three presents the findings from 27 detailed interviews conducted with successful clothing producers in the Witwatersrand. Overall, it is concluded that the South African research confirms certain of the findings relating to trajectories of successful SME development in other parts of Africa.     

Banking in the Shadows: A Comparative Study of China and India

In recent years there has been increasing interest in the rise of shadow banking in China and India. In this paper, we aim to get a better understanding of the differences in trends and investigate the factors leading to the increase of shadow banking in these two major emerging economies. We find that financial exclusion is a common factor leading to the growth of shadow banking in both countries. While financial reform has taken place in India, financially repressive policies still prevail in China. Although several regulatory measures have been adopted in India and China, the size of the shadow banking sector in these two countries remains underestimated. Thus, streamlining and enhancing data collection is a key priority for both nations. We argue that regulation in both countries should be more activity focused (specific field in which a shadow bank is focused on) rather than sector or entity based, and it should be at par with banks. The shadow banks provide last mile connectivity to remote, distant, and ignored segments of the population not serviced by the formal financial sector. As this enhances financial inclusion, a balanced approach is required keeping in view both costs and benefits of the shadow banking system.     

Perceptions of economic and financial conditions of households in 2000

'The economy grew by 3,0 per cent in 2000. This was the fastest growth since 1996, buoyed by a strong recovery in household consumption spending and an increase in exports of over 7 per cent in real terms' (Trevor Manuel, Minister of Finance, Budget speech, 21 February 2001). 'Growth won't solve our problems. The faster the economy grows, the faster will be the creation of jobs for the highly skilled. So there will be more, not fewer, problems with income disparity' (Iraj Abedian, Standard Bank Group Economist, cited in Financial Mail , 2001a). The aim of this article is to examine the extent to which economic growth, experienced in 2000, improved the financial and economic conditions of South African households, by analysing a national representative survey of 2 700 adult South Africans conducted by the Human Sciences Research Council in September 2000. The survey results were analysed by disaggregating data by race, gender, area type, province and Living Standard Measure (LSM). The theme emerging from this article is that although the majority of households were negatively affected financially and economically, proportionally more Africans, women, rural residents and poor households were hardest hit. Although South Africa achieved a 3 per cent economic growth rate in 2000, there is limited evidence to suggest that this growth trickled down to the majority of households.     

Spillovers of the Conventional and Unconventional Monetary Policy from the US to South Africa

This paper assesses the effect of US monetary policy on South Africa during the period 1990–2018. We separately analyse and compare the effect of conventional monetary policy, before the Global Financial Crisis, and unconventional monetary policy, after the US monetary policy reached the zero-lower bound. Our impulse response function results indicate that monetary policy in South Africa responds mainly to local inflation, economic activity and financial conditions. While there is strong correlation between the global and South African financial cycle, the financial cycle is not transmitted to the real economy because of the sluggish response of industrial production and domestic credit, especially after the global financial crisis. We see this as an indication of the effects of structural issues to the real economy and constrained households’ balance sheet which has prevented the local economy to take advantage of low local interest rates and the global economic recovery after the crisis.     

Supply‐leading versus Demand‐following Hypothesis: Empirical Evidence from Three SSA Countries

Abstract: This study investigates empirically the direction of causality between financial development and economic growth in three sub‐Saharan African countries — Kenya, South Africa and Tanzania. The study seeks to answer one critical question: Does financial development in sub‐Saharan African countries exhibit a supply‐leading or demand‐following response? Using three proxies of financial development against real GDP per capita (a proxy for economic growth), the study finds that the direction of causality between financial development and economic growth is sensitive to the choice of measurement for financial development. In addition, the strength and clarity of the causality evidence is found to vary from country to country and over time. On balance, a demand‐following response is found to be stronger in Kenya and South Africa, whilst in Tanzania a supply‐leading response is found to be dominant. The study therefore recommends that for Kenya and South Africa the real sector of the economy should be developed further in order to sustain the development of the financial sector. However, for Tanzania, there is need for further development of the financial sector in order to make the economy more monetized.     

Quantifying Inefficient Expenditure in Local Government: A Free Disposable Hull Analysis of a Sample of South African Municipalities

Municipalities in South Africa play a pivotal role in the provision of basic services to communities. However, local government as a sphere in the country is notorious for its spending inefficiency, which is cited as a major factor in service delivery failure. This paper quantifies inefficient expenditure at the local government level by estimating efficiency scores for a sample of 129 municipalities in South Africa from the 2005/2006 to the 2009/2010 municipal financial years. In essence, this paper examines the technical efficiency of municipalities by using the nonparametric free disposable hull approach and finds that 10 municipalities are constantly efficient over the period. On average, input efficiency scores range from 42% to 46%, suggesting that, in general, municipalities can achieve the same output levels with over 50% less resources. Quantitatively for the 2009/2010 financial year, this amounts to a total of R80 billion being spent inefficiently, which equates to R220 million being “wasted” per day.     

RISK–RETURN TRADE‐OFF AND BEHAVIOUR OF VOLATILITY ON THE SOUTH AFRICAN STOCK MARKET: EVIDENCE FROM BOTH AGGREGATE AND DISAGGREGATE DATA

The study analyses the nature and behaviour of volatility, the risk–return relationship and the long‐term trend of volatility on the South African equity markets using aggregate level, industrial level and sectoral level daily data for the period 1995‐2009. By employing dummy variables for the Asian and the sub‐prime financial crises and the 11 September political shock, the study further examines whether the long‐term trend of volatility structurally breaks during financial crises and major political shocks. Three time‐varying generalised autoregressive conditional heteroskedasticity models were employed: one of them symmetric, and the other two asymmetric. Each of these models was estimated based on three error distributional assumptions. The findings of the study are as follows: First, volatility is largely persistent and asymmetric. Second, risk at both aggregate and disaggregate level is generally not a priced factor on the South Africa (SA) stock market. Third, the threshold autoregressive conditional heteroscedasticity (TARCH) model under the generalised error distribution is the most appropriate model for conditional volatility of the SA stock market. Fourth, volatility generally increases over time, and its trend structurally breaks during financial crises and major global shocks. The policy and investment implications of the findings are outlined.     

Financial distress and non‐executive director compensation: Evidence from state‐owned enterprises in South Africa post King III

Using a sample of South African state‐owned enterprises (SOEs), we examine the pre‐ and post‐period impact of King III on non‐executive director (NED) compensation with emphasis on financially distressed SOEs. This paper adopts a difference‐in‐differences analysis technique with repeated measures as the basis for testing the hypotheses. The revised Altman Z‐score model which incorporates features unique to emerging markets is used to measure financial distress. Our findings indicate that SOEs that adopted King III will increase NED compensation when the firm has a positive performance and will severely penalize NED when the firm faces financial distress. This study highlights the importance of well‐crafted corporate governance policies. It further sheds light on the importance of King III and how its implementation may prove vital for the success of an enterprise.     

Land degradation in South Africa: Conventional views,changing paradigms and a tradition of soil conservation

Land degradation is currently a major concern in South Africa. However, awareness of the problem and attitudes towards it have changed little over the past century. Soil erosion and veld degradation are continually being depicted as acute problems, and overpopulation, overstocking and poor agricultural practices are viewed as the major causal factors. Internationally, however, a new paradigm is emerging, which takes a somewhat more optimistic view of the situation in Africa. One of the basic tenets of this changing perception is that there exists an untapped wealth of indigenous knowledge about the environment and associated human potential. Within this context, this study examines and describes the local tradition of stone terracing on cropland within the former Venda in the Northern Province of South Africa. This living tradition has deep historic roots and local farmers have a remarkably well‐developed understanding of the causes and effects of erosion. While the research location is unique in many ways, this study indicates that farmer tradition and innovation in the former homelands may be more common than has been supposed, and should not be ignored but actively sought out and built upon.     

Evaluating South Africa's Open Economy

The competing theories of the macroeconomic trilemma and dilemma are empirically tested for South Africa. The empirical findings show evidence of the trilemma theory being applicable to South Africa, supporting the country's ability to maintain monetary independence (MI). An empirical puzzle, however, emerged as South Africa's MI index decreased during the country's 2000–2014 inflation‐targeting period. A possible explanation, and subject for further research, is that the increasing opening of South Africa to international flows since 1995 may have caused South Africa to be more exposed to international business cycles and shocks, resulting in a reduction in measured MI.     

Restless minds: South African students and the brain drain

This article reports the results of a 2002 survey of emigration potential among a representative sample of 4784 postgraduate and final-year undergraduate students at South Africa's tertiary educational institutions. The authors created a valid and reliable index of emigration potential and found slightly higher levels than those measured by identical questions in previous surveys of skilled adult South Africans. Multivariate regression analysis revealed that the factors that most increase emigration potential among South Africa's future skills base are logistical ones, including family encouragement and financial resources. Next in importance are students' prospects of a better life for themselves and their families in their target countries than in South Africa. Finally, the study showed that patriotism and strong national identity decrease emigration potential while previous travel abroad and access to information about life abroad increase it. It also found that a range of possible government attempts to make emigration more difficult would only increase students' probability of leaving the country.     

Mobile entrepreneurship: Informal sector cross-border trade and street trade in South Africa

This article presents the results of a study on the participation of non-South Africans in the handicraft/curio sector of street trade in South Africa in informal sector cross-border trade. The findings provide an introduction to the largely unexplored phenomenon of informal sector cross-border trade between South Africa and neighbouring states and challenge some of the common myths about non-South African street traders which pervade public discourses around migration. The Southern African Development Community (SADC) is presently involved in prolonged and contentious negotiations to establish a free trade area for the region based on the SADC protocol on trade and development. At the same time, against a backdrop of anti-immigrant rhetoric, the South African government is developing a new migration policy. The article argues that informal cross-border entrepreneurs should not be disadvantaged by the renegotiation of regional trade agreements and the reformulation of South Africa's new migration policy.