MFI Report

Origins of Teba Bank

Teba Bank has its origins in the mining industry. The bank previously operated as the Teba Savings Fund, an entry-level banking operation providing basic services to mineworkers on gold and platinum mines since 1976. The Fund serviced over 800 000 savings accounts and processed more than 20-m transactions a year to the value of R10bn. These services were offered free of charge to miners with most costs borne incurred by employers in the industry.

The granting of a banking license by the SA Reserve Bank in July 2000 paved the way for Teba Bank to expand its current services to a broader market beyond the mining industry, which has been its traditional base.

By the early 1990s the Fund began to experience some difficulties in continuing to obtain an exemption from the Banks Act. At the same time major developments were taking place in the broader political and social arena that led to a rethink of the functions performed by both Teba Savings Fund and Teba Ltd. The restructuring of the gold mining industry forced employers to reassess the role they played in assisting retrenched miners returning to the rural areas where the likelihood of obtaining sustainable employment was poor. Labour in the form of the National Union of Mineworkers (NUM) put pressure on employers to explore various options to assist miners facing retrenchment.

A view began to emerge amongst some leading lights in the industry for the need to:

· Broaden the financial services offered to employees and their rurally based dependants
· Explore options around the provision of health care and retirement benefits more appropriate to rural realities
· Consider various possibilities whereby retrenched miners could access the opportunities that exist in the rural areas for self-employment or sustainable economic activity.

In 1999 a decision was taken that the Fund should apply for a banking license as part of a broader vision to provide micro-financial services to low income earners and the poor in and around mining towns and the rural areas. The conversion of the Fund into a bank was also to be viewed within the context of the restructuring and refocusing of Teba Ltd from an employment to a development agency.

Teba, The Employment Bureau of Africa, dates back to the turn of the last century and was established to recruit labour for the mines from as far afield as Malawi and Angola. As part of its primary function of recruiting labour for the mining industry, Teba played a critical role in ensuring mineworkers were able to transmit funds to the rural areas of South and Southern Africa. Out of this initiative Teba Savings Fund was born. The Fund was set up in 1976 as a trust and operated initially as a voluntary deferred pay system whereby some of the miners salaries were transferred from their employers payroll for access at more than 100 Teba Ltd field offices in the Southern African region. The Fund effectively augmented the function of a mine paymaster thereby providing an important service to employers, employees and rural communities dependent on earnings from the mines.

Over the years the Fund extended its basic services to provide mineworkers savings account facilities, which allowed for the voluntary depositing of earnings at savings outlets on the mines. All mineworkers were then able to withdraw cash conveniently, safely and free of charge at any of the Teba Savings Fund offices situated on the mines or at Teba Ltd offices in the labour sending areas. Teba Savings Fund effectively operated in association with Teba Ltd in the provision of basic financial services to miners. Since its inception the Fund operated under a restrictive trust deed whose primary objective was to provide dependable and self-funding financial services to mining employers, employees and their beneficiaries. The Fund was granted an exemption from the Banks Act, 1990 and the Income Tax Act 1996 while it operated in terms of this trust deed.

Teba Ltd and Teba Bank are entirely separate legal entities with no cross ownership. They are, however, closely linked. There is cross-board representation and an agency agreement whereby Teba Ltd, on behalf of Teba Bank, provides financial services to mining employees, dependants and beneficiaries in rural areas from where miners are traditionally recruited.

Teba Bank aims to draw on its long-established experience as a provider of basic financial services to miners. It is a niche bank, aiming to provide affordable micro-financial services to the under-banked in non-metropolitan South Africa.

Teba Ltd has been involved in the recruitment of labour for the gold-mining industry for over 100 years. It has established a separate non-profit company, to pursue its new strategy of facilitating rural development in South Africa.

The sole shareholder of Teba Bank is a Trust jointly controlled by mining industry employers and employees who are represented by the National Union of Mineworkers.

The Mineworkers Development Agency (MDA), on behalf of the NUM, the majority union operating in the mining industry, participated in a working group which was established to look at the transformation of the Fund. It was finally agreed that the Fund should be converted into a fully-fledged micro-bank whose focus was to grow the market amongst those previously denied access to mainstream financial services such as savings accounts.

The formation of Teba Bank

The awarding of a banking license coupled with the change in the trust deed paved the way for the establishment of Teba Bank. Instead of providing basic services only to mineworkers, the bank expanded its products and services to those beyond the mining industry. New products include fixed deposit and savings accounts, micro-loans, housing loans, funeral insurance and financial management advice to those previously denied such facilities. The bank is currently piloting a debit/ATM card aimed at providing cost-effective, cashless and secure transactions for the unbanked.

In terms of the changes to the trust deed, the banks sole shareholder is a non-profit making trust which is jointly controlled by the NUM and the Chamber of Mines. This ownership structure is unique in the South African context and will ensure that the bank fulfils its core mandate to provide affordable financial services to the under-banked. The trust specifies that the targeted customers of the bank will be all employees in the mining industry, their dependants in the rural areas and mining towns and broader members of rural communities.

The Chamber of Mines and the NUM representatives to the trust have each nominated three trustees who have appointed a board of directors, which comprises 10 no executive and two executive members. At present the NUM is the sole representative of labour as it is the union that represents the majority of mineworkers. Any dividends earned by the trust could be reinvested into the bank as development finance for new initiatives. The trust allows for up to 40% of the holding companies equity to be sold to external shareholders.


Teba Bank is well placed to meet the financial needs of more than 4 million adults who live in and around the main Teba outlets in the rural areas of the Eastern Cape, KwaZulu Natal, Free State, Northern Province and the North West as it aims to service this market exclusively. The bank has a strong existing customer and micro-savings base, a history of working in under-serviced rural areas and has support from mining employers, labour, government and development agencies. Keeping costs in check will largely be achieved through the reliance on existing infrastructure and network systems provided through its association with Teba Ltd.Teba Ltd and Teba Bank are entirely separate legal entities with no cross ownership. They are, however, closely linked. There is cross-board representation and an agency agreement whereby Teba Ltd, on behalf of Teba Bank, provides financial services to mining employees, dependants and beneficiaries in rural areas from where miners are traditionally recruited.
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