x p guma : banking in africa and its future outlook address by dr x p guma, deputy governor of the south african reserve bank, to the african banking congress 2008, johannesburg, 8 july 2008. * * * 1. distinguished guests, ladies and gentlemen, i have been asked to speak today on central bank perspectives on the outlook for banking in africa, focusing in particular on the following issues : the role of central banks and major banks in regional integration ; latest trends and experiences, and lessons learnt. having taken note of the formidable array of speakers who are to take to the podium during the course of the day, i have taken the liberty to reduce the scope of my remarks by focusing on the situation in south africa and the prospects for the southern african region. others will, no doubt, enlighten us regarding developments elsewhere. 2. the role of central banks and major banks south africa currently has 20 registered banks, 14 local branches of foreign banks and 46 representative offices of foreign banks, supervision of banks being the responsibility of the registrar of banks, a constituent component of the south african reserve bank ( sarb ). the relationship between these two is described in the banks act 94 of 1990 in the following terms ( chapter ii. s4 ) : “ the reserve bank shall, subject to the approval of the minister ( of finance ) designate an officer or employee in its service as registrar of banks, who shall perform, under the control of the said bank and in accordance with the directions issued by the bank from time to time, the functions assigned to the registrar by or under this act … ” the sarb in turn is defined in section 223 of the constitution of the republic of south africa 1996 as “ … the central bank of the republic and is regulated in terms of an act of parliament ”, and “ the powers and functions of the sarb are those customarily exercised and performed by central banks … ” ( section 225 ). five of the largest banks account for the greater share of the banking sector assets of r2860. 5 billion as at may 2008, a pattern which has been consistent over time. the salient features of this banking sector are summarised in tables 1 and 2. this outcome may be viewed in contrast to the situation described by dr a. j. bruwer in his polemic, south africa : a case for a national gold and banking policy ( 1957 ), although echoes of the sentiments that he expressed have some resonance in certain sections of

by 11, 0 per cent in june, only slightly below the recent peak of 11, 3 per cent in april. goods price inflation measured 6, 7 per cent, up from 6, 6 per cent in may, while services inflation increased to 5, 8 per cent from 5, 7 per cent in may. the reserve bank ’ s measure of core inflation, which excludes food, fuel and electricity increased marginally to 5, 6 per cent compared with the 5, 5 per cent annual increase in the previous month. bis central bankers ’ speeches on the other hand, producer price inflation for final manufactured goods has been on a downward trend, declining from 7, 0 per cent in april to 6, 5 per cent in may mainly due to a moderation in price inflation of food, beverages and tobacco products. this was below the consensus forecast of 6, 9 per cent but the impact of the drought is still evident in the increase in prices of agricultural products, particularly cereals and other crops as well as live animals and animal products. inflation expectations, as reflected in the survey conducted by the bureau for economic research, have remained anchored near or just above the upper end of the inflation target range. in the second quarter, average expectations for 2016 were 6, 3 per cent, marginally up from 6, 2 per cent. average expectations for 2017 were unchanged at 6, 2 per cent and were marginally down to 5, 9 per cent for 2018. average 5 - year inflation expectations declined from 6, 1 per cent to 5, 9 per cent in the second quarter, with downward revisions by all groups. the yield differential between inflation linked bonds and conventional government bonds ( break - even inflation expectations ) declined across all maturities but remain elevated. the latest inflation forecast of the bank shows a marginal improvement compared with the previous forecast, although an acceleration in inflation is still projected for the second half of this year. inflation is only expected to return to within the 3 – 6 per cent target range during the third quarter of 2017, averaging 5. 5 per cent in 2018. according to sarb forecasts, inflation is expected to average 6, 6 per cent in 2016 and 6, 0 per cent in 2017, compared with forecasts of 6, 7 per cent and 6, 2 per cent at the mpc meeting in may. the expected peak, at 7, 1 per cent in the fourth quarter of 2016, has been revised slightly down from 7, 3 per cent due in part to lower