Is it working?

Policy design and implementation are strong: CODI now provides transparent, rules‑based protection, aligning South Africa with international best practice and addressing a weakness noted in past FSAPs. The remaining tests are operational – whether CODI can execute timely payouts in a stress event, manage levies without over‑burdening smaller banks, and sustain effective communication so that coverage is understood but does not encourage moral hazard.

Actions

Actions taken: (i) CODI legally established and made operational; (ii) Deposit Insurance Regulations and the Statement of need and expected impact published; (iii) Financial Sector and Deposit Insurance Levies Act and amendments to Schedule 1 gazetted, setting CODI and supervisory levies; (iv) CODI launched publicly on 24–25 April 2024 with clear communication of the R100 000 coverage limit, estimated to fully protect about 95% of depositors; and (v) CODI and SARB have published detailed FAQs and technical guidance for banks and the public.

Are there plans?

Plans include: (i) ongoing payout‑readiness testing and data‑quality improvements with member banks; (ii) periodic review of coverage limits, eligible products and levy rates via amendments to Schedule 1 to the Levies Act and associated regulations; (iii) tighter integration of CODI processes with the resolution and ELA framework; and (iv) targeted public‑awareness and literacy campaigns, to ensure depositors understand what is and is not covered.

Is it on the agenda?

The 2026 Budget Review describes CODI and the DIS as key components of the financial‑stability and inclusion architecture, emphasising that deposit insurance helps protect vulnerable depositors and supports a more competitive banking sector by providing a common safety net for smaller banks. SARB underscore that CODI was a major milestone in implementing the Twin Peaks and resolution‑framework reforms.

Goals

To enhance the stabilibity and public confidence in South Africa's financial system by providing explicit, pre-funded protection for retail depositors against the risk of bank failure.

Is it working?

Substantively, determining the effectiveness of financial inclusion reforms in South Africa will involve assessing various indicators such as bank account ownership, proximity to financial institutions and the usage of digital financial services. It will require tracking savings and credit activities, transaction volumes and the cost and diversity of financial services. Furthermore, evaluating financial literacy, the implementation of educational programmes and the impact on economic wellbeing through changes in income levels, poverty rates and SME growth will be crucial. Additionally, measuring inclusivity across demographics, comparing rural and urban inclusion, assessing consumer protection frameworks, monitoring customer complaints and observing behavioural changes in savings and investments will be critical. Therefore, conducting national surveys and impact studies, and correlating financial inclusion progress with economic indicators like GDP growth and employment rates, will ultimately provide a comprehensive view of the reforms' effectiveness. While the country has a long way to go on financial inclusion, a recent study by the Commission for Gender Equality published in December 2023 revealed some progress with women having improved access to finance, ownership of private assets as well as access to public assets.

Actions

While the groundwork has been laid, and the structures are in the process of being established, full implementation is ongoing, with the main actions and frameworks expected to unfold in the coming months and years.

Are there plans?

Financial inclusion to be underpinned by the three policy pillars and priorities, namely; 1) Deepening financial inclusion of individuals. 2) Extending access of financial services to SMEs. 3) Improving the enabling foundations - leveraging a more diversified provider and distribution database.

Is it on the agenda?

An intra-government financial inclusion sub-working group and financial inclusion forum is to be established in 2024 to lead the development (in partnership with NT) of the National Implementation Strategy and Action Plan. Furthermore, to measure, monitor and assess the impact of the strategy, a Financial Inclusion Monitoring and Evaluation framework will also be developed in 2024.

Goals

When effectively implemented, financial inclusion reform in South Africa should aim to create an enabling environment for previously disadvantaged individuals to have access to financial resources to enhance their livelihoods through employment and investment opportunities. The ultimate objective of financial inclusion for individuals in a country like South Africa is to ensure that all individuals and businesses have access to useful and affordable financial products and services that meet their needs. This includes transactions, payments, savings, credit, and insurance, delivered in a responsible and sustainable way.

Is it working?

Early indications are that the financial inclusion strategy is paying off: according to National Treasury, 1.2 million basic bank accounts opened in 2024 and around 57,000 SME loans were facilitated. Initial phase targets were met on product rollout and consumer outreach and usage targets are improving, but gaps remain in certain vulnerable communities.

Actions

While the groundwork has been laid and the structures are being established, full implementation is ongoing, with the main actions and frameworks expected to unfold in the coming months and years. National Treasury coordinates with FSCA, SARB, and the NPS Act reform. Sector outreach targets women, youth and unbanked communities while progress is being evaluated quarterly in financial sector updates.

Are there plans?

The plan is to underpin financial inclusion by three policy pillars and priorities:1) Deepening financial inclusion of individualsrn2) Extending access of financial services to SMEsrn3) Improving the enabling foundations - leveraging a more diversified provider and distribution database.National Treasury is developing a new national strategy in 2025, building on the 2023 policy paper. Implementation is ongoing, with new targets and tiered account requirements being phased in. Treasury plans annual reporting, regular updates to Parliament, sector audits and consumer outreach. Phased implementation runs to 2026 with stakeholder consultations ongoing.

Is it on the agenda?

Yes, financial inclusion is on National Treasury's agenda marking this reform as a Cabinet priority. Updates are featured in annual sector reviews, G20 reporting and FSCA consumer protection communications​.

Goals

Financial inclusion reform in South Africa aims to create an enabling environment for previously disadvantaged individuals to have access to financial resources to enhance their livelihoods through employment and investment opportunities. The goal is for 90% of the adult population to have access to formal financial services by 2027, to be achieved by enhancing financial stability, protecting depositors and improving access to finance for individuals and SMEs.

Is it working?

The enabling framework for SME finance and innovation is improving, especially on payments access and fintech‑support. However, on-the-ground access and competition are still uneven, with SMEs citing collateral requirements, risk aversion and slow public‑sector payments as persistent obstacles. The success of this reform will depend on the actual implementation of activity‑based licensing, the effectiveness of blended‑finance and guarantee schemes, and whether COFI and credit‑information reforms translate into more tailored, risk‑sensitive SME products rather than generic lending requirements.

Actions

To date, government and regulators have: (i) launched and maintained the IFWG Innovation Hub and Regulatory Sandbox, which has admitted SME‑focused fintechs; (ii) laid the groundwork for NPU and activity‑based licensing; (iii) issued key prudential and conduct reforms (Basel III, COFI, credit‑information enhancements) that underlie SME‑finance risk management and fairness; and (iv) channelled infrastructure and green‑finance initiatives in ways that create procurement and financing opportunities for SMEs.

Are there plans?

Planned measures include: (i) implementation of activity‑based payments licensing and NPU from H2 2026, explicitly opening up acquiring and initiation to non‑bank providers that often serve SMEs; (ii) further credit‑information reforms and SME‑oriented conduct standards under COFI; (iii) expansion of blended‑finance and guarantee programmes targeting SME participation in infrastructure and green‑transition projects; and (iv) continued operation and refinement of the IFWG sandbox, prioritising SME‑relevant innovations such as alternative credit‑scoring, digital factoring and supply‑chain platforms.

Is it on the agenda?

The 2026 Budget emphasises SMEs and competition as part of the growth strategy, pointing to financial sector reforms that lower barriers to entry for new providers and improve SME access to payment rails, credit and risk‑management tools. Fintech‑policy briefings and IFWG communications echo that activity‑based regulation, sandbox support and open infrastructure are intended to make it easier for new entrants – including SME‑focused platforms – to operate.

Goals

To expand access to finance for SMEs and new business models, promote diversification of funding sources and providers, and support innovation and competition in financial services while maintaining prudential soundness and consumer protection.

Documents

• Document One

References

• Reference Link One
• Reference Link Two
• Reference Link Three

Departments / Govt Institutions

National Treasury