Pros and cons of property stokvels

Stokvels in South Africa are big business and becoming bigger. A group saving scheme that was once used for a likeminded group of individuals who share the same goals to meet short-term needs, such as buying groceries or school supplies at the end of the year, is fast becoming a way for the new generation to build wealth and invest in property.

Continue reading View more

The WWF Nedbank Green Trust celebrates 30 years

The WWF Nedbank Green Trust celebrates 30 years of sparking change for people and the planet

The global Covid-19 pandemic has shaken the world and touched every life in many different and often very painful ways. However, the pandemic has also given us a new opportunity to reimagine a world where we focus on the needs of people and the planet and recreate systems of life, economics, education, health and employment that focus on the well-being of all people and not simply the self-centred and consumerist desires of the few.

“Never before has the slogan of the WWF Nedbank Green Trust – igniting new ways for people and nature to thrive – been more relevant than it is today,” said Augustine Morkel, manager of the WWF Nedbank Green Trust. New global research, conducted by the Economist Intelligence Unit (EIU) and commissioned by the World Wide Fund for Nature, shows that public interest in, and concern for nature, has risen markedly (16%) in the past five years and continues to grow during the Covid-19 pandemic.

“People all over the world, particularly in emerging markets, are increasingly aware of the planetary crisis, and this is affecting their behaviour. In a clear validation of a growing trend, concerned individuals, non-profit organisations, businesses, governments, and society are acting on their concerns over nature loss in an assortment of ways. And we at the WWF Nedbank Green Trust are proud to have been catalysing change for the harmonious co-existence of people and planet for the last 30 years,” said Morkel.

The WWF Nedbank Green Trust, founded in 1990 by Nedbank and the World Wide Fund for Nature (WWF South Africa) funds innovative projects that have the potential to contribute to solving some of South Africa’s greatest societal and environmental challenges. From the beginning, the WWF Nedbank Green Trust achieved its greatest influence through partnerships.

“We work with partners and communities who champion the custodianship of our natural resources and direct their energy and efforts to key levers of change for South Africa’s future. Our prosperity depends on the coming together of governments, businesses, organisations and all people, and so, for the past 30 years, the Green Trust has worked to create and cement these interconnected relationships,” said Morkel.

This 30-year partnership has raised more than R350 million for the funding of approximately 300 major conservation projects. You can help the WWF Nedbank Green Trust by supporting the Nedbank Green Affinity Programme, which is aimed at supporting nature conservation projects through community-based programmes and is key in looking after natural resources such as our oceans, wildlife, freshwater, climate and more.

“Nedbank is proud to use its financial expertise to do good for individuals, families, businesses and society. We pride ourselves as the ‘green and caring’ bank, committed in our sustainability efforts to make a lasting difference in society. Through our partnership with the WWF-SA, we have seen the benefits of working with ordinary South Africans who share the same vision. The past 30 years have proven that by opening the doors of conservation and making it inclusive, we can all contribute to a better environment through job creation, food security and economic growth,” said Tobie Badenhorst, Head: Group Sponsorships and Cause Marketing at Nedbank.

Through the Nedbank Green Affinity Programme, South Africans are encouraged to contribute to nature conservation at no cost to them. “Nedbank has created a programme that makes it easy for anyone to contribute and what is great about it is that your contribution comes at no cost. As a bank that cares about nature conservation, it is our duty to lead the way and encourage everyone from individuals to corporates, urban and rural communities to support the environment. As we celebrate 30 years of the WWF Nedbank Green Trust, we hope to inspire all South Africans to join the Nedbank Green Affinity Programme and make the world a better place,” Badenhorst said.

View more

An interview with Arnold Van Graan, Analyst at NEDBANK CIB

“The biggest driver of the industry’s fortunes would, however, still be the gold price”

Next month Investing in African Mining Indaba will be hosting Nedbank CIB’s gold roundtable during the Virtual Investment Programme. Ahead of the roundtable, Mining Indaba caught up with Arnold Van Graan, Analyst at Nedbank CIB to start the conversation on what he predicts for gold in the future, how the landscape has changed and what fundamentals are likely to shape the gold sector within the next five years.

2020 was a record-breaking year for gold; how do you expect it to perform in 2021?

The gold price was boosted by an abundance of bad news and uncertainty in 2020. Although 2021 is off to a shaky start, we expect the risk outlook to improve in a quarter or two, which could see the safe-haven support for gold wane. An improving global economic and geopolitical outlook and stability could see some of the uncertainty ease over the coming months, pulling gold down. However, we do not expect a total collapse in the gold price, but possibly a bit more weakness from current levels, as most of the support (lower real rates/inflation and uncertainty) has been priced in. We, therefore, have a muted view on the gold price outlook for 2021e.

How do you think the gold landscape will change in 2021? Will we see more M&A and consolidation?

With the current gold rally potentially having reached a peak, we expect the focus of management teams to change slightly, and see growth coming back into focus. And often, with growth comes M&A. Although gold companies are currently focusing on smaller, lower-risk projects, we believe we could see companies start to embark on larger projects. We, therefore, expect more capital to be allocated to growth projects and see further industry consolidation. We would not be surprised to see a large M&A deal in the SA mining sector in the coming year.

Bitcoin has had a resurgence over the past few months. Do you see Bitcoin and other cryptocurrencies challenging gold’s relevance? Is “gold old” in the minds of younger generations?

Bitcoin is gaining a lot of attention, with many investors now finding it a viable investment. Younger generations, in particular favour Bitcoin, as it gives them more freedom from institutional control, more flexibility and perceived higher returns. Tesla’s foray into Bitcoin could see Bitcoin grab even more attention from investors.

However, Bitcoin as an investment option is extremely volatile and is more suited to short-term and medium-term trades rather than long-term investors, in our view. It appears as though many retail investors see Bitcoin as a means of making a quick profit.  Gold remains a good asset class through which investors can diversify their portfolios. Gold has long been and remains the go-to traditional safe-haven asset. Bitcoin could be a good way to diversify your portfolio, but it will not replace gold, in our view.

Investors and analysts now talk of an “ESG premium” for stocks boasting strong environmental, social, and governance credentials. Which gold companies do you believe warrant an ESG premium?

We do not believe ESG matters have truly started to impact valuations yet. It appears as though the operational and financial performance of gold companies is still the major driver of valuations. The increased focus on ESG in recent years has seen mining companies moving from talk to action, in our view. We expect further pressure related to ESG matters on mining companies, which would see even more resources and spending on ESG-related matters over the coming years, and this could start impacting capital allocation decisions.

The link between ESG credentials and financial performance is becoming increasingly pertinent to the mining industry’s success. ESG has become more than just a company’s social licence to operate; it has become a non-negotiable criterion on many more fronts. We, therefore, believe companies with solid ESG credentials could start to attract an ESG premium, but even more so, we expect a lack of ESG compliance to weigh on valuations.

What are the fundamentals likely to shape the gold sector in the next 5 years?

Declining reserves remain a major challenge for the sector and could be one of the biggest factors shaping the industry over the next few years. We expect gold producers to embark on growth initiatives in order to replace reserves.  Companies that lack organic growth or exploration potential in their portfolios would turn to M&A. We, therefore, expect M&A activity to remain high, with many of the smaller miners merging to retain scale and relevance.  The focus on ESG and the global transition to clear energy could also impact the gold sector, with gold companies potentially using this to diversify into copper, while exiting certain jurisdictions that carry ESG risk.

We expect cost pressure to be a key challenge facing the sector, with the transition to renewable and sustainable energy sources adding to it. The biggest driver of the industry’s fortunes would, however, still be the gold price. A flat or rising gold price should see the sector continue to prosper and attract interest from a wide array of investors. However, in time, we expect the typical cycle of rising costs and capital expenditure to repeat itself, which could see the sector underperform the gold price.

Join Mining Indaba and Nedbank CIB on Wednesday 31st March at 13:00 (GMT) for the roundtable to discuss the points raised in the interview further. For more information, please click here.

The gold roundtable is open exclusively to approved investors and analysts of the Virtual investment Programme. To find out how to get involved with the Virtual Investment Programme, please click here.

View more

A blueprint for growing your business sustainably and responsibly

Dr Gary Kendall, Nedbank’s sustainability and strategy specialist, says that the Covid-19 pandemic provides a unique opportunity to learn about the character of systemic risk, which we will need to draw on as we face up to further challenges.

Continue reading View more

Humanity needs a dramatic paradigm shift: Nedbank

Covid-19 is simply a symptom of a deadlier underlying issue: our dominant belief that humanity is separate from and above the natural world.

Continue reading View more

African Development Bank invests billions in Nedbank SDG-linked bonds

The African Development Bank Group (AfDB) has recently completed an investment of R2 billion in Sustainable Development Goals-linked bonds (SDG bonds) that were issued by Nedbank South Africa.

This investment will strengthen Nedbank’s capital base and allow it to generate billions for investments in environmentally friendly and climate-sensitive projects such as affordable housing and renewable energy. 

Boost for South Africa’s economy

This is a first for Africa. It is expected to boost the South African economy by creating more than 6000 new jobs and an estimated 20 000 SME loans. There will be an additional estimated R4 billion investment in clean energy. This would help South Africa become less dependent on coal-generated power during the next decade. 

AfDB’s Director for the Financial Sector, Stefan Nalletamby, said that they are pleased to able help the South African economy.

“We are very pleased to be able to support the South African economy by injecting investment into the private sector through a responsible and trusted partner who is committed to responsible investing. This investment will help accelerate the recovery of the economy after the slowdown caused by the Covid-19 pandemic,” Nalletamby said.

This investment will also aim to help those from disadvantaged backgrounds such as women and those who live in rural communities. In Southern Africa, there are thousands of people who have difficulty banking and would benefit from Nedbank’s low-cost digital financing initiatives. During the next five years, this could lead to an estimated R2 billion in SME loans. 

Emphasis on going green

This investment is in line with the African Development Bank’s Ten-Year Strategy (2013-2022). This plan is focused on promoting green and inclusive growth. It is also in keeping with their top five priorities: 

(i) Light up and Power Africa, 

(ii) Feed Africa 

(iii) Industrialize Africa 

(iv) Integrate Africa  

(v) Improve the lives of African people.

View more

Nedbank launches SA’s first ‘green’ tier 2 capital instrument

Nedbank recently announced the launch of an innovative Sustainable Development (SDG) Linked, tier 2 capital instrument. This instrument which is the first of its kind in South Africa, is listed on the Green Bonds segment of the JSE.

The launch of this bond builds on Nedbank’s established leadership in the sustainable development finance space, having previously offered two highly successful renewable energy ‘Green’ Bonds, which were significantly oversubscribed, and the proceeds of which are now funding a number of high-potential solar and wind renewable energy projects.

According to Mike Davis, Group Executive: Balance Sheet Management at Nedbank, this R2 billion SDG bond underscores Nedbank’s commitment to driving sustainable development in Africa through the deployment of innovative funding mechanisms, to ensure that capital flows are orientated towards responsible investing.

“Our renewable energy bonds clearly demonstrated Nedbank’s commitment to facilitating asset finance with a focus on moving South Africa’s renewable energy agenda forward,” he explains.

“But we have always recognised that maximising sustainable development funding requires capital or debt commitment as well; and this  sustainable capital instrument, with its green use-of-proceeds commitment, is our way of meaningfully delivering on this responsibility.”

Davis points out that the launch of this sustainable capital instrument, which was designed and created in partnership with the African Development Bank (AfDB), allows Nedbank to give even greater effect to its stated purpose to use its financial expertise to do good.

“The use-of-proceeds commitment that underpins this capital instrument not only provides evidence that Nedbank is providing significant financial support to the Sustainable Development Goals, and particularly SDG 7,” he explains.

“But also serves as a significant drawcard for foreign investment in South Africa, which is sorely needed at this point, if for no other reason than to help the country build fiscal and monetary resilience and to see it through the challenging economic times that lie ahead.”

The significance of this sustainable capital instrument is further emphasised by the fact that it comes a little over a month after Nedbank’s shareholders unanimously voted in support of two new sustainable development resolutions. These commit the bank to adopting and publicly disclosing an energy policy and reporting fully on its approach to measuring, disclosing and assessing its exposure to climate-related risks.

Davis says that the launch of the sustainable capital instrument is a prime example of Nedbank putting its money where its mouth is when it comes to delivering on these resolutions. The instrument is effectively the bank’s commitment to funding the origination of impact-based assets that will not only promote immediate proactive sustainable development, but also ensure the long-term sustainability and positive impact of the bank’s balance sheet into the future.   

“With the imminent launch of the JSE Sustainability Segment later in July, it is imperative that banks fully embrace the absolutely vital role they must play in enabling and driving sustainable socioeconomic development for the benefit of all, not only by facilitating third-party investment but also through the appropriate application of capital into where it is needed most,” Davis emphasises.

This Bond has been  validated independently by the Carbon Trust who provided a second party opinion and reaffirmed that this capital instrument aligns fully to the Green Bond Principles, thereby lending full credibility and transparency to the utilisation of the proceeds to support sustainable development initiatives and adding significant value to the instrument and its investors.

Stefan Nalletamby, Director for the Financial Sector Department at the African Development Bank, congratulated Nedbank on its launch of South Africa’s first ‘green’ tier 2 capital instrument and expressed the hope that this would be the first of many such instruments, representing a groundswell of innovative capital commitment to sustainable development by the country’s financial institutions. The use of proceeds aligns with AfDB’s “Light Up and Power Africa” High 5 priority which entails providing clean energy to the South African / SADC power pool.

Nalletamby said, “We are very pleased to be able to support the South African economy by injecting investment into the private sector through a responsible and trusted partner committed to responsible investing. This investment will help accelerate the recovery of the economy from the slowdown caused by the Covid-19 pandemic.”

“The successful launch of this instrument demonstrates the growing appetite in South Africa for sustainable and renewable investment on both sides of the balance sheet,” Davis points out.

“This will not only help to underpin and drive the development of South Africa’s green economy, but also send a very powerful message that it is time for both borrowers and investors to get fully behind the green agenda.”

View more