Lending Money in Africa – The South African Money Market

Economists all over the world consider lending money in Africa, especially the South African Money Market as nothing less a sanctuary in the midst of turmoil all over. Today the credit market across the globe is facing crisis and turmoil. This has prompted majority of the investors to turn towards classes that have lower risk assets. As a result there has been considerably large inflow of funds in the South African money market. Consequentially lending money in Africa, especially in South Africa has become easier and convenient.

Unlike they did in the past, the investors in the international market have now started checking for the security of the investments they made. The financial market, especially in the African continent is no more as risk free as they happened to be in the past. Those were the days when returns on lending and capital investments were granted and lending money in Africa was a viable proposition.

Despite the volatility around the global market, African banks and more so the South African banks face little direct exposure to those classes that are creating uncertainties in the international market such as geld lenen. Like most other developed and developing economies, banks are the major lending agencies in South Africa.

Lending money in Africa is in fact their domain. Fortunately, banking trade in and around South Africa is profitable and is subjected to limited funding exposure. Despite international uncertainty, the loan market in Africa in general and South Africa in particular have not suffered. Unlike most of the developed market, the Reserve Bank was not required to introduce additional liquidities in the system of Banking in South Africa.

The five large South African Banks regulate most of the credit business there. On the other hand in United States there are no less than 8.500 banks that carry out the loan transactions. However, the lending money in Africa is mostly regulated by legislation. In South Africa they are regulated by the National Credit Act. The lending practices are quite stringent for the local markets. Yet the system is highly credible and vibrant unlike their United States counterpart. In United States, due to the complacency and also owing to huge mismanagement, lending practices have declined to a large extent over the past few decades.

If you take into consideration the unique aspects of lending money or geld lenen in Africa by looking at South Africa, you will find some novel features in it. The funds in the money market here are regulated under the Collective Investments Schemes Act of 2002. The process provides built in diversification methodology. This means you invest in multiple wings and thus escape from the dangers of high concentration risks. Business prudence always calls for avoiding the urge of keeping all eggs in one basket.

Basic difference in the system of money lending in Africa and especially the South Africa can be seen from the local exchange controls they have. Therefore the funds in the money market of South Africa are precluded from holding such instruments that caused the international credit crisis. Money market in South Africa and a greater part of Africa around the apparently stable economy has therefore become a lucrative ground for the lenders.