Absa Purchasing Managers’ Index (PMI) increased for a third consecutive month.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) increased for a third consecutive month to reach 60.0 in March, up from 58.6 in February. The sustained improvement in the headline PMI bodes well for the continued recovery of the manufacturing sector after it was dealt a blow in the third quarter of last year. Indeed, the PMI suggests that the sector should record a robust quarterly expansion in the first quarter of this year.

Further improvements in new sales orders, and in turn business activity, underpinned the increase in the headline PMI. On the demand front, export orders remained positive (albeit losing some ground) while local demand may have benefitted from the recovery in the tourism and hospitality sector and normalising business conditions in general. Despite better output, the employment index dipped below the neutral 50-point mark once again.

While orders and activity remained robust in March, sentiment among respondents about future business conditions turned decidedly less optimistic. The index tracking expectations in six months’ time fell by 14.4 points to 55.1. This was the biggest single month decline since November 2008 (at the start of the global financial crisis). To be sure, the level of the expectations index remains well above recent lows seen during the height of the pandemic. Respondents are likely worried about the stagflation (lower global growth and thus weaker demand for South African exports, as well as a further rise in domestic input cost pressures) impacts from the war in Ukraine.

Indeed, a striking outcome of the March PMI survey was on the price front. Like many of its international counterparts, the purchasing price index of the Absa PMI surged in March. At 95.9, the series reached the highest level since the BER started publishing the series in 1999. The surge in the oil price is a key driver of the increase, but prices of food, fertiliser and other raw material inputs are also rising rapidly. As flagged last month, the risk is that these prices remain high(er) for longer as the war in Ukraine drags on and sanctions on Russia are possibly intensified. In the very least, over the short term, the hefty fuel price hike expected next week will add additional pressure on costs. Furthermore, supply chains remain strained with (temporary) lockdowns in China amid a surge in COVID-19 cases disrupting global trade flows and possibly also exacerbating shortages of key inputs.  

• PMI March Report 2022
• PMI March infographic 2022

Absa Group today announced the appointment of Arrie Rautenbach as Chief Executive Officer (CEO), effective immediately.

The appointment follows a thorough recruitment and selection process completed by the Board.  

Arrie, who is currently Chief Executive of the Group’s retail and business banking (RBB) unit, is the first internally appointed CEO since 2006. He has more than 25 years’ banking experience, which includes serving as the Group’s Chief Risk Officer, simultaneously providing executive leadership for the Group Separation Programme and Group Strategy Office. His extensive experience in the banking sector, his in-depth knowledge of Absa through several executive roles over the years, and his experience and strengths in strategy development and execution for the group, positions him ideally to lead the Group at this time.

Previous Absa roles include Chief Executive of Retail Banking, Managing Executive of Absa Card Division and Managing Executive of Distribution. He began his career with Absa Group at Bankfin in the late 1990s.

Interim CEO Jason Quinn will resume his position as Group Financial Director with immediate effect.

Wendy Lucas-Bull, outgoing Absa Group Chairman, said: “On behalf of the Board, I am delighted to announce the appointment of Arrie as our Group CEO. I am confident that his leadership will provide the continuity and stability necessary to consolidate our purpose and strategy.  I know that the Group is in good hands under Arrie’s executive leadership as I hand over the reins of the Board Chairmanship to Sello, who takes over on 1 April 2022.  I would like to thank Jason and Punki for their significant contributions as Interim Group CEO and Interim Financial Director, respectively, during which time the Group’s positive operational momentum was maintained. I am pleased to be handing over the Chairmanship to Sello, with the Group in very good shape, having delivered record results for 2021 and with strong capital and liquidity ratios.”

Sello Moloko, Absa Group Chairman Designate, said: “Arrie’s appointment will anchor our performance and growth, as we consolidate our position as a leading financial services provider on the continent. Arrie is aligned with the Board on our organisational imperatives, including talent management and transformation. The Board looks forward to working with Arrie and the executive to ensure a Pan-African financial services Group that creates sustainable value for all its stakeholders.  Furthermore, I look forward to continuing to work with Jason and Punki and thank them and the Exco for such strong delivery over the last year, which has placed the Group on a solid footing for the future.”

Arrie Rautenbach, Absa Group CEO, said: “I am humbled and honoured to lead Absa during challenging conditions locally and internationally. I am excited at the prospect of working with a talented and diverse team, leading an outstanding business that is positioned to seize the many opportunities that lie ahead. I look forward to working with the Board and the Executive in consolidating our strategy and performance, driving organisational and cultural transformation, and delivering financial and social value for all our stakeholders, and sustainable future growth and returns for Absa and its shareholders.”

Punki Modise will step down as Interim FD of Absa Group and Absa Bank and as an executive director of the Boards, with immediate effect. She will take the position of Interim Chief Executive: RBB and remains on the Group Executive Committee (Exco).

About Arrie Rautenbach

Arrie was previously the Chief Executive of Absa Group’s retail and business banking (RBB) unit and Absa Financial Services Ltd. He has been a Group Exco member for six years. With more than 25 years’ banking experience, Arrie previously served as the Group’s Chief Risk Officer, simultaneously providing executive leadership for the Group Separation Programme and Group Strategy Office.

His earlier roles within the Absa Group included a number of executive leadership positions, encompassing Chief Executive of Retail Banking, Managing Executive of Absa Card Division and Managing Executive of Distribution. He began his career with Absa Group in Bankfin in the late 1990s.  From a global perspective, Arrie has previously served on the Barclaycard and Retail and Business Banking and Risk executive committees (as part of Barclays Plc).

Under Arrie’s stewardship, Absa was awarded “Best Retail Bank in Africa in 2020” by The Asian Banker, and was previously the recipient of awards in the categories of “Best Retail Bank in Africa”, “Best Retail Bank in South Africa” and “Best Credit Card Management” (by The Asian Banker). He was previously named “Retail Banker of the Year” by the International Banker magazine.

An accomplished banker, Arrie has contributed to the industry through his board executive membership of the Banking Association of South Africa (BASA), board memberships of Woolworths Financial Services and other related industry bodies, locally and internationally, in addition to serving as the current Chairperson of Ford Financial Services.

Arrie holds a Bachelors in Business Administration (cum laude) and Masters in Business Administration from the University of North-West: Potchefstroom. He has also participated in an Advanced Management Programme at INSEAD. Within Absa, he completed the Absa Development Initiative (ADI) programme.

Absa Group has signed agreements with the Meltwater Entrepreneurial School of Technology (MEST) in Ghana, the Cape Innovation and Technology Initiative (CiTi) and Grindstone in South Africa to support and collaborate in initiatives that are aimed at growing emerging technology and other businesses in Africa.

The agreements expand Absa’s Digital Partnerships capability, established in 2020 to facilitate collaboration with innovative, mature start-ups from around the world. The capability connects Absa and its partners through key local, regional and global networks to promote co-creation potential, particularly in the technology and digital space.

“At Absa, we understand that informal markets and small businesses are instrumental in the growth of African economies. Through the Absa Digital Partnerships ecosystem, we aim to drive and support the growth of innovative and mature tech start-ups as well as their impact in the different communities,” said Michelle Anderson, Head: Information and Technology Office Strategy and Group Partnerships at Absa.

“By collaborating with MEST, CiTi and Grindstone, we will amplify efforts to unlock new opportunities across a wide spectrum of the entrepreneurial landscape in Africa, from female founders to green-tech start-ups.”

Ian Merrington, CEO of CiTi says, “Inclusive entry into the digital value chain for entrepreneurs and SMMEs, both in the formal and informal economy, plays a pivotal role in developing the South African economy. The Cape Innovation & Technology Initiative believes that we can create opportunities for execution of new ideas and growth by providing education and access to technology and innovation. We have collaborated with Absa for ecosystem and micro-enterprise development, as well as acceleration programmes and events that include the Top Tech Tools for Women in Business.”

CiTi is a non-profit company with a mission to build a future-fit, inclusive society through technology and innovation.

Ashwin Ravichandran, Portfolio Advisor at MEST, says “Our collaboration with Absa will see several enterprises in the Ghanaian entrepreneurial ecosystem receive skills training and insights in business and technology. As always, we will continue to draw on the African-wide expertise of ecosystem enablers, governments, multilateral organisations, private sector, and civil society to stimulate a thriving start-up ecosystem.”

MEST is primarily focused on youth (18-35) entrepreneurship training programme that puts talent and skills first.

Absa’s collaboration with Grindstone will provide entrepreneurs with the strategic, management and technical skills needed to scale up their businesses and improve their functioning and ensure that they become more sustainable and fundable.

Grindstone Accelerator provides a structured entrepreneurship development programme. The company believes that entrepreneurs play a key role in solving some the challenges that exist in markets across the continent and are often the pioneers that create the new technologies and systems that bring change to society.

“The success of our programmes is rooted in expert partner contributions, and the Absa link will greatly boost our support to the scaleups coming through our Grindstone programmes and into the rest of Africa,” says Keet van Zyl, Partner at Grindstone.

“The significant value that start-ups and entrepreneurs can bring to Africa’s economies can be amplified through collaboration and acceleration programmes such as those facilitated or supported by Absa, in line with our digital transformation and our aim to be an active force for good in everything we do,” concludes Anderson.

After introducing the NewGold and NewPlat exchange-traded funds (ETFs) on the Botswana Stock Exchange, Absa expands its precious metal investment options today on BSE by listing NewPalladium ETF.

NewPalladium was first listed on the ETF sector of the Johannesburg Stock Exchange on 27 March 2014 and has since been secondary listed on the Namibia Stock Exchange. It tracks the Palladium price and enables investors to invest in a listed instrument (structured as a debenture) in which each security is equivalent to approximately 1/100 ounces of real Palladium held in a secured stockpile in custody with global custodian ICBC in London UK.

Since its launch, NewPalladium has grown to over R400 million assets under management due to its healthy returns and investor appetite. It is now the third precious metal in South Africa, Namibia and Botswana, through which institutional and retail investors can securely invest directly in palladium bullion, with the added benefit of minimal administrative fees.

Supporting the richness of Africa

The Southern African Development Community (SADC) is home to some of the world’s best precious metals and stones and is one of the largest exporters of minerals to the global market. Introducing another precious metal ETF in one more African country strengthens the support for local resources on the continent.

“It’s Absa’s belief that a good economy requires a vibrant capital market underpinned by innovative financial products. Absa has set a very good foundation in listing such products in various African markets by using products that are indigenous and precious to the SADC as the basis of the tools developed to deepen the African markets,” says Michael Mgwaba, Head of Exchange-Traded Products at Absa Corporate and Investment Banking.   

ETFs are among the fastest growing investment funds in major markets across the world. In addition, their attractiveness lies in their low costs, tax efficiency and stock-like features. In 2021, ETFs globally reached over US$9trillion in assets under management.

“This shows that more and more investors are using ETFs in their investment portfolios to complement existing investment strategies. We believe the introduction of alternative investments such as the precious metals funds using ETFs, will increase investor confidence to look beyond traditional asset classes and consider the richness of our African continent when choosing asset classes to invest in,” says Mgwaba.

The latest Absa Homeowner Sentiment Index (Absa HSI) indicates that confidence in the South African property market was at 84% in Q3, recovering to Q1 levels after the dip in Q2 in reaction to acts of violence and destruction to property at the beginning of July 2021.

Sentiment towards selling property also finally recovered to pre-lockdown levels. More respondents in Q3 believe that you can get a good price for your property, and another group of respondents believe that if you can no longer afford the property, then you should rather sell.

As the municipal elections were approaching at the time of collecting data, there was a growing concern from the investor respondent segment around political instability (80%) and Land expropriation risk (100%).

Salient points:

• The reasons given for confidence in the South African property market were that property always increases in value (53%), and is a secure asset (52%). Additionally, more respondents cited improvement in the economy.
• This increase in sentiment follows the South African economy growth of 1,2% in Q2.
• All the sub-indices saw a positive change against Q2. This is indicative of sentiment towards property ownership and investing in existing property.
• Compared to Q1, we saw a rise across all sub-indices in Q3 with the exception of the sentiment towards selling which has grown to exceed Q1.

About the Absa HSI

The Absa Homeowner Sentiment Index (HSI) indicates the consumer confidence level regarding the property market in South Africa.

While understanding the overall confidence level of consumers gives us an important overall reference and hence remains important, we also measure various aspects of consumers’ confidence levels. We refer to these as “sub-indices” in this report and among these we measure sentiments about the current timing for buying, selling and investing in property.

Please click here for the full report. For any questions please do not hesitate to reach out to us at  absahomeloans@absa.co.za

Absa Bank has signed a long-term contract with Salesforce, a global leader in customer relationship management (CRM) solutions, to bring about a step change in servicing individual and business-banking customers as the bank accelerates its digitisation programme.

In line with its efforts to get closer to customers, Absa is rolling out the software across its South African operations, providing customer-facing employees with CRM features that provide a ‘360-degree view’ of the customer, allowing employees to service customers more efficiently.

“The agreement is a significant milestone in Absa’s digitisation transformation,” said Thato Matolong, Absa Bank Managing Executive: Channel, Infrastructure and Change. “In the past, customer-facing employees had to use multiple applications relating to customers. Now, we will have a single tool that provides a 360-degree view of a customer,” he said.

The new agreement with Salesforce builds on work that Absa commenced with the global cloud-based software solutions provider previously.

The difficulty for many banks in servicing customers is that various teams across different product areas (such as transactions, home loans, insurance, vehicle financing and banking) many geographies and different channels (such as contact centres and branches) often use different systems and processes to service customers. This can result in customers experiencing services as uncoordinated or inefficient.

By using a single customer interface, employees are better equipped with a seamless view of customer data and history across multiple areas and enabled to more rapidly provide solutions. At the same time, the new CRM solution better enables Absa to cross-sell products, thereby supporting revenue generation.

While implementation is a gradual process across the Group’s operations in Africa, the cloud-based solution will allow for quicker client onboarding, faster solutioning for customers and ‘solving right’ the first time, said Matolong. The ultimate objective of the journey is to align behind a single distribution strategy and to build world-class channels that deliver optimal experiences.

“Absa Bank exemplifies how to successfully conduct a true digital transformation journey, and we are honoured to be a part of it,” says Denis Terrien, Executive Vice President and CEO of Salesforce for Southern Europe, Middle East, and Africa, “Customers are the lifeblood of any business, and dealing with them in the new digital world, requires developing an omnichannel strategy that is supported by a single view. This is the goal of the Salesforce Customer 360 platform.”

“The new agreement not only signifies another milestone in our digitisation journey, but also realises  our strategy to partner with leading global organisations that continue to innovate in a space where we want to excel in terms of customer experience,” said Matolong.

Absa Group will exceed its goal of equipping 1,500 staff members across Africa with cloud-computing skills this year through its cloud incubator initiative. Absa launched the cloud incubator programme in March to support its digital transformation journey. A total of 1,496 participants successfully completed the training by the end of October 2021 and a further 280 are anticipated to complete the programme by the end of the year.

The initiative was undertaken jointly with Amazon Web Services (AWS), whose global Skills Guild programme was designed to help large enterprise organisations accelerate their cloud adoption journey and build cloud fluency for employees. Absa employees from several countries, including South Africa, Kenya, Ghana, Botswana, Zambia, Tanzania, Mauritius and others, participated in the programme.

“At Absa, our goal is to ensure that employees are equipped with the right skills and, through the cloud incubator programme, we were able to bridge the skills gap in cloud technologies. Empowering our employees with cloud skills will unlock further potential for innovation and solutions that ultimately improve the way in which we serve our customers,” said Ebrahim Samodien, Chief Information Officer: Group Services at Absa.

Absa is accelerating cloud adoption and is already one of the largest cloud adopters in Africa. Companies that store their data in the cloud have access to powerful ‘cloud-computing’ capabilities. It means they can analyse, interpret, process and manage data faster and at a larger scale.

A report titled ‘Cloud in Africa 2020’ generated by World Wide Worx said 97% of respondents in a survey had either increased their spend on cloud or that their spend had remained the same in the past year.

The key outcome from the cloud incubator programme was for participants to be able to identify cloud opportunities and to create more efficient, scalable services and solutions. The employees can now use their understanding and knowledge to drive the broadscale digital transformation in the bank.

The cloud incubator programme offered the employees a range of learning opportunities, including workshops that focused on the impact of cloud technology on the business, training sessions that looked at how cloud reduces operational costs as well as how cloud enhances business processes.

“Since the establishment of the cloud incubator initiative, I feel like Absa is really taking the cloud revolution seriously. Prior to the Cloud Incubator initiative, I used to feel like cloud computing was just a talking point,” says Phumlani Mbabela, a Lead Product Engineer at Absa who participated in the programme. “The initiative has also helped me to improve my cloud proficiency and technical skills,” said Mbabela.

Participants in the cloud incubator initiative were able to experiment with cloud technologies outside of their roles while improving their skills.

“I began taking advantage of the many free training sessions and acquired the AWS Solutions Architect – Associate Certification. I’m now preparing to renew my developer certification and level up with a professional-level certification as well,” said David Quagraine, a Lead Architect at Absa Bank Ghana. “As if getting access to these free resources were not enough, I also have access to hands-on labs that allow me to experiment with cloud technologies not directly related to my current role such as data analysis and machine learning, which I enjoy very much.”

The Absa Group and Absa Bank Boards have resolved, in terms of section 71(3)(b) of the South African Companies Act, to remove Mr Sipho Pityana as a director of the Boards, with immediate effect.

The decision followed a 23 November 2021 meeting during which Mr Pityana was provided an opportunity to address the Boards’ allegations that he had neglected or had been derelict in the performance of his functions as a director of the Boards and had failed to conduct himself in the interests of Absa.

After careful consideration of the matter and Mr Pityana’s responses to the allegations, the Boards arrived at the view that, amongst others, Mr Pityana pursued his own personal interests to the detriment of Absa and thereby created a material and sustained conflict between his interests and those of Absa.

While the Boards respect Mr Pityana’s individual right to administrative fairness, unfortunately in this matter, the Boards concluded that the pursuit of his personal interest at the cost of the Group’s interest created a sustained and irresoluble conflict. Absa has a duty to its stakeholders to put the Group’s interest before individual interests.

The decision to remove Mr Pityana as director followed an earlier decision on 12 November 2021 to remove him as lead independent director and Chairman of the remuneration committee. 

Developments in the litigation instituted by Mr Pityana

On 23 November 2021, Absa filed its answering affidavit in the application instituted by Mr Pityana against the Prudential Authority, in which he cited Absa as a respondent.  Absa opposed the application because the advice Absa has received is that the relief sought by Mr Pityana implicates Absa in participating in what he alleges was an unlawful informal process by the Prudential Authority.  Absa has been advised that it is likely that the court case will be heard during the course of next year.

Johannesburg, 8 November 2021: In a landmark transaction highlighting confidence in the township and rural commercial property, Absa Bank acted as Sole Global Coordinator and Bookrunner in the strategic refinancing of Exemplar REITail Limited’s R3.135bn debt package.

The transaction includes R1.791bn of ‘sustainability-linked’ loan, with margin reductions, applied subject to the Borrower’s successfully achieving pre-agreed environmental targets (solar energy, carbon offset, and water intensity). Uniquely, the facility includes use-of-benefit provisions, for which the Borrower has undertaken to utilise any interest cost savings arising from the sustainability-linked loans to invest in community initiatives in their property catchment areas.

Exemplar is a market-leading developer, owner, and manager of the township and rural retail shopping centers in South Africa. The Mall of Thembisa, developed by McCormick Property Development and one of Exemplar REITail’s recent acquisitions, was earlier this month named the ‘Best Retail Development’ and awarded a 5-star nomination by the judging panel of the International Property Awards.

The R3.135bn senior, secured, syndicated debt package establishes a flexible platform to support Exemplar’s future growth. Beyond refinancing existing debt, the facilities will be used for capital expenditure and will increase Exemplar’s flexibility by increasing available working capital for the business.

The transaction was well supported by the market, garnering an appetite that exceeded triple the original transaction size. As a result of this strong demand, the transaction was upsized to re-finance the majority of Exemplar’s debt. In addition to its role as Global Coordinator and Bookrunner for the transaction, Absa Commercial Property Finance provided over 50% of the funding requirement and is acting as facility agent.

Jason McCormick, Exemplar REITail Limited CEO, comments: “We are delighted with the successful conclusion of this landmark transaction highlighting the confidence of the market in the strength of the Exemplar business. The proceeds of this transaction have, in part, been earmarked for the continued expansion of the business, helping us to provide retail services to more of the most under-serviced regions of our nation. We have always put our local communities first which is once again emphasized by this transaction. All interest savings generated will be invested directly into our communities, ensuring their ongoing upliftment and development in-line with our #ChangeforGood mantra.”

Klaus-Dieter Kaempfer, Head: Commercial Property Finance and Equity Investments, Absa said: “This landmark transaction is a great example of how Absa CIB is working in partnership with clients, acting as both lead arranger and funder. Despite the challenging market backdrop in the commercial property sector, the fundraising was a huge success, and a testament to the quality of the Exemplar’s business and management, as well as our expertise in managing capital markets transactions of this nature.”

“We are also particularly proud of our leading role in developing an innovative new Sustainable Finance solution, whereby the benefit received by the Borrower for meeting environmental KPI’s is reinvested into CSI initiatives, allowing lenders and the borrower to play a role in addressing the challenges in the societies within which we operate.”

Absa is set to launch their latest virtual exhibition in collaboration with the Artist Proof Studio (APS) on 4 November 2021. The exhibition will run until the end of this year. 

With this collaboration, Absa seeks to continue playing a shaping role in society by nurturing and supporting fledgling artists from the APS. Twelve final year students will also be awarded bursaries to the value of R580 000. 

Business Practice Masterclasses will be led by leading personalities in the arts such as Banele Khoza, Kim Siew and Sarah McGee. The masterclasses will equip the APS students with the necessary business acumen to better manage their business as they launch their careers and also how to market their artwork.

The virtual exhibition will see 23 artists from the innovative and engaged APS community showcasing their artwork on the Absa Art Hot Spot platform.

“We recognise that the growth we want to achieve is inextricably linked to our firm commitment to be an active force for good in the communities where we operate. The partnership with APS will allow us to continue showcasing our advanced online capabilities and will also help us to meaningfully impact the development of young artists,” says Absa Senior Specialist Art Curator, Dr Paul Bayliss.

“We have used the restrictions brought about by the pandemic to entrench ourselves as a leader in showcasing art digitally. This ranges from launching the Absa Art Hot Spot webinar series, to hosting several online art exhibitions, masterclasses, and the Absa L’Atelier Awards virtually as well as migrating certain elements of our art-related sponsorships and partnerships to this innovative online platforms,” he adds.

APS Managing Director for Marketing and Business Development, Nathi Simelane, says this partnership with Absa will allow them to showcase some of their growth in an exciting way since students have had to adapt to a hybrid communication learning process over the past 18 months.

“This exhibition will allow our more senior students to re-examine their own identities, through an investigation of their cultural ideologies, practices, personal and collective histories,” he says.

“Some will celebrate and honour fundamental aspects of their cultural identities whilst others question  prevailing patriarchal traditions. In many of the pieces, the ‘personal’ is laid bare. This is sometimes explored through representations of the body or a particular place and space. The notion of ‘home’ as a state of mind, or something less representative and tangible, emerges in the senior student’s work. It marks and narrates a journey experienced by many through lockdown and beyond of introspection, probing and reconciliation,” he adds. 

The Masterclass series kicked-off on 29  September when renowned artist, gallerist and curator, Banele Khoza, hosted a session that focused on developing, identifying, maintaining, and making the most of opportunities in developing an artist’s career.

The next session was hosted by Kim Siew on 27 October and dealt with maintaining and growing relationships with peers, gallerists, curators, donors, buyers, and industry leaders.

Sarah McGee will host the final session in the series on 10 November when she will take a closer look at galleries, teaching students how to engage with galleries, the pricing of artwork, contracts and issues around consignment.

All the masterclass sessions can be viewed on the Absa Art Hot Spot