UBank and African Bank’s audacious future in the mining sector

Sibongiseni Ngundze, Group Executive: Consumer Banking

According to a 2022 report by consulting firm PwC, the performance of the local mining sector has been a beacon of positivity amidst the gloom that has characterized local economic forecasts.

In its report, PwC stated: “The industry’s financial performance exceeded expectations on most fronts as global supply chains jostled to find their way back to pre-pandemic levels. This resulted in a growing demand for commodities in the sector, which saw record rand prices for the platinum group metals basket, iron ore, and coal. Most other South African commodity prices remained at relatively high rand levels.”

Mining remains a crucial contributor to the South African economy. The sector currently employs around 450 000 people and makes a direct contribution of 8.1% to GDP. The plight of mineworkers, therefore, has always elicited heated debate. This includes being separated from their families for long periods of time, enduring higher health risks and tolerate more dangerous workplace conditions than other professions, yet have often felt under-compensated for the riches they extract from the earth.

Over the years, mineworkers have smartly built up a unique ecosystem that services their needs and looks after their interests. This ecosystem includes powerful unions, investment companies and banking services.

Ubank and African Bank

Enter Ubank. Ubank has a long and rich history of providing basic financial services to mineworkers and their families for more than 40 years. In 1975, when other financial institutions largely ignored this sector of the market, Teba Cash Financial Services was formed to provide mineworkers with basic financial services. These included facilitating the remittance of funds to families and dependents in the rural and labour-sending areas using a linked account facility.

In June 2000, Ubank (then Teba Bank) was granted a banking license, although its ownership remained in a trust managed by trustees elected by the National Union of Mineworkers and the South African Chamber of Mines. The beneficiaries of the trust were the bank’s customers. In 2007, Ubank welcomed a new vision, mission, set of values, and strategy. Essentially, this saw Ubank set itself up to become the ‘Worker’s Bank of Choice’.

The Ubank story echoes that of African Bank, which was founded to address the challenges of financial exclusion experienced by black entrepreneurs during Apartheid. Financial industry pioneers such as Dr Sam Motsuenyane and Dr Richard Maponya foresaw African Bank as a trusted financial partner that would walk alongside consumers, regardless of their social circumstances, on the road to prosperity.

It therefore seemed apt that, when Ubank ran into trouble in 2022, African Bank would pick up the baton and continue to provide essential financial services to mine workers and their families. The acquisition of the majority of Ubank’s assets and liabilities not only fed into African Bank’s audacious Excelerate25 strategy, but it also underlined the founding philosophy that inspired its creation.

“This deal fits into our ‘Excelerate25’ strategy of building a scalable and sustainable bank with a compelling listable proposition,” said Sibongiseni Ngundze, the Group Executive for Consumer banking at African Bank.

“The vision of our founders, of “an African Bank for the people, by the people, serving the people”, demands that we strive to make a meaningful difference in our country and in the lives of those who contribute so much to our economy.”

Ubank’s lending book is being absorbed into African Bank’s larger lending book and the base will diversify the bank’s funding sources. In addition, Ubank’s customers will now have access to African Bank’s nationwide distribution footprint, as well as a more extensive suite of products and services.

The future for African Bank in the mining sector

Ahead of the annual Investing in African Mining Indaba , slated to take place in February, Ngundze is looking forward to seeing what considerations will come out of the annual gathering under the theme: “Unlocking African Mining Investment: Stability, Security and Supply.”

“With African Bank now a firm stakeholder in the mining industry, we are keen to innovate around the challenges and opportunities facing the industry and its workers to support the economic leverage of this powerful sector,” Ngundze said.

“African Bank prides itself on being customer-centric and, for us, creating solutions for our mining customers that keep them digitally enabled and enhance our core offerings is exciting,” he added.