Browsing by Author "Mthanti, Thanti"

Now showing 1 - 7 of 7
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    Assessing the feasibility and prerequisites for establishing a sovereign wealth fund in South Africa
    (2025) Mbalo, Usiphile; Mthanti, Thanti
    In 2023, the Sovereign Wealth Fund (SWF) Institute reported that assets under management for the 173 global SWFs totalled in excess of US$ 11.5 trillion, with Africa contributing only US$ 132.69 billion. These funds are invested both domestically and internationally, resulting in a favourable impact on their own countries. The objective of the present study was to determine what the prerequisites to create a SWF in South Africa. The research delineates a SWF and analyses the history thereof. The study additionally examines investment methods, governance structures, and frameworks for SWF. Within the South African context, a well-managed SWF may enhance intergenerational equity, foster inclusive growth, and bolster fiscal resilience amid global volatility and domestic socioeconomic problems. Revenue from mineral resources or the divestiture of state-owned assets may enable a SWF to stabilise South Africa's economy against foreign shocks, diminish reliance on debt, and furnish a sustainable source of revenue for social and infrastructure development. The 2020 announcement by the former Minister of Finance set an intention for the South African Government to establish a SWF by allocating ZAR 30 billion, as well as exploring various funding solutions through the sale of spectrum, allocation of petroleum, gas, and mineral rights, sale of non-core state assets, and future budget surpluses. The announcement was received with enthusiasm; however, a persistent question lingered: can South Africa establish a SWF, or is it simply an elusive ambition? The present study gathered data through semi-structured interviews with diverse industry executives in finance, development finance, and asset management. The researcher employed a qualitative exploratory research methodology to obtain insights regarding South Africa's potential for establishing a SWF. The study's major findings indicated that a SWF should be seen as a savings vehicle capable of aiding future generations considering the country's escalating debt. The SWF may potentially support South Africa during economic difficulties. For South Africa to establish a SWF, it must be founded on a robust legislative framework that enables the fund to be agile, competitive, sustainable, governed effectively, and insulated from political interference. South Africa possesses a pre-existing model from which it can derive insights and enhance to establish the fund.
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    Does mobile money have a part to play in poverty reduction within South Africa?
    (2025) Mollagee, Shuaib; Mthanti, Thanti
    There is a growing amount of research that points towards an additional factor capable of increasing inclusive growth and therefore successfully reducing poverty levels within a country, that is, the use of mobile money. With the rise of mobile phone penetration within African countries, its use has gone beyond communication, providing key financial access in the form of phone-based money transfers and storage. The mobile phone has assisted in providing the previously marginalized with more affordable and cost-effective financial services. The population living in poverty also generally lack information vital to the work they do. Whether its market prices, information on new income earning opportunities, or even as simple as up-to date weather reports that could affect their existing job. The lack of up-to-date knowledge adds to their already vulnerable state. Mobile phones assist in providing this information to the poor in cost-effective ways. This study tests whether mobile money has a part to play in poverty reduction, specifically within South Africa. It uses data obtained from FinMark Trust from the 2018 Finscope SA survey. To that end, the Alkire and Santos (2011) method was used to compute a multidimensional poverty index (MPI). Using the MPI, an instrument variable approach was used to treat the endogeneity bias seen by the two-way relationship between poverty and mobile money adoption. Factors such as gender, age, location, race, and access to necessities such as electricity, clean water and sanitation were additional factors used to calculate the MPI. Results indicate that individuals who are non-white, female, and who live in rural areas contribute the most towards poverty in South Africa. In order to check for robustness, a propensity score matching method (PSM) was used.. Results show that mobile money has a negative contribution to multidimensional poverty, that is, individuals who adopt mobile money have reduced rates of multidimensional poverty. The robustness demonstrated that mobile money has a positive and statistically significant effect on multidimensional poverty reduction.
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    Financial regulation and financial development in developing economies: case of South Africa
    (2025) Mahlake, Lance; Mthanti, Thanti
    The study analyses financial regulation, specifically for the banking sector, set globally and implemented locally by different countries, and how it impacts financial development in the context of developing countries, considering the pace of reform since the 2008/9 financial crises and its technical nature. The regulatory framework affects advanced and developing economies the same and thus raises concerns on its efficiency in the later given the general level of financial development. The scope was restricted to focus on key indicators including financial development, systemic risk, equilibrium credit and bank regulation. Time series data from 2017 to 2022 was modelled using the Auto Regressive Distributed Lag technique which presented strong evidence that the leverage ratio is likely to result in a contraction in the long run trend of bank credit to the private sector-to-GDP ratio and possibly distort equilibrium credit for the economy in the long run, resulting in restricted capacity for financial development. The model presented no short-term relationships. A review of the microprudential regulatory framework may be required to achieve an optimum regulatory environment that protects and enables the country to grow and benefit from healthy development of the financial system that can foster greater financial depth and economic growth.
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    Investigating environmental quality and economic growth interdependency: an environmental kuznets curve study of South Africa
    (2025) Padayachee, Bradley; Mthanti, Thanti
    Economic growth at the expense of environmental quality has become an increasingly important policy concern since 2015, with the establishment of the Sustainable Development Goals at the United Nations Framework Convention on Climate Change in Paris. This study investigated the interdependency between environmental quality and economic growth in South Africa, within the framework of the Environmental Kuznets Curve (EKC) hypothesis, based on annual emissions and economic growth data from 1970 to 2018. The study examined the short and long run relationships of CO2, NO2, SO2 and PM2.5 emissions with economic growth, respectively, utilising a time-series Autoregressive Distributed Lag estimation method in conjunction with classical unit root and cointegration techniques. The study revealed that CO2, NO2 and PM2.5 has positive and statistically significant long run relationships with economic growth in South Africa. Additionally, CO2 was found to be the only indicator of environmental quality that depicted a negative and significant long run relationship with economic growth squared, thereby revealing a negative parabolic relationship with economic growth in accordance with the Environmental Kuznets hypothesis. Similarly, only CO2 emissions portrayed an EKC relationship with economic growth in the short run, while NO2 and PM2.5 were found to have linear relationships with economic growth. Overall, only CO2 was found to have a valid EKC relationship with economic growth in the long and short run for South Africa. The result reveals that incremental economic growth may result in diminishing CO2 emissions as the country transitions from an industrial to a service-oriented economy. This result is linked to South Africa's reliance on coal for energy, its energy-intensive industrial economy, and the foundational relationship between these factors and economic growth. The study recommends that South Africa explores policies aimed at enhanced emissions monitoring and improved regulatory threshold enforcement. Despite the results, the country should also seek to further diversify its energy sector and explore less carbon intensive alternatives without foregoing energy security.
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    Sustainability for lower risk: examining ESG scores as indicators of credit risk in African firms
    (2025) Malandu, Vimbai Melissa; Mthanti, Thanti
    In light of the growing consideration of Environmental, Social, and Governance (ESG) metrics in credit appraisal, this study investigates the relationship between ESG performance and credit risk for African firms from 2012 to 2022. Using Refinitiv ESG scores and Altman's Z”-score as the primary credit risk measure, this analysis employs OLS, fixed effects, random effects, instrumental variables, and GMM estimations. While the combined ESG score shows no significant relationship with credit risk, the study makes original contributions as one of the first African emerging market studies to examine ESG as a non-financial credit risk determinant. It uniquely applies a multi-model econometric approach and combines multiple credit risk proxies, including the National University of Singapore Credit Research Initiative's Probability of Default. This triangulation enhances analytical robustness and contributes to the empirical foundation for ESG-credit risk research in emerging markets. Accounting for endogeneity through GMM, the Governance pillar shows a short-term, significant negative impact on credit risk, indicating governance's time-sensitive role in creditworthiness. The Environmental and Social pillars show no significant impact, with mixed results in static models, highlighting sensitivity to model selection. Industry-specific analysis reveals no significant relationship between aggregated ESG scores and default risk. However, the Environmental pillar positively impacts credit risk in Industrials, while Governance negatively impacts credit risk in Basic Materials. No significant ESG effects are found in Consumer Staples, Consumer Discretionary, or Real Estate sectors. The study is limited by constrained ESG data coverage for African firms, reflecting broader challenges in ESG reporting across the continent. These findings emphasise the need for mandatory, standardised ESG disclosures to enable nuanced credit risk assessments, critical for African markets where development capital and effective risk management frameworks are in high demand.
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    The effect of exchange rate volatility on bond market development in emerging markets
    (2025) Mokgotloa, Refiloe; Mthanti, Thanti
    This paper examines the effect of exchange rate volatility on bond market development in 13 emerging markets for the period 2000 to 2020 as well as whether the investor base moderates the relationship between exchange rate volatility and bond market development for the period 2004 to 2020. Using a panel data set and the feasible generalized least squares (FGLS) method we find that exchange rate volatility has a negative and statistically significant relationship to bond market development. This finding is consistent with existing literature. We also find that the investor base has a negative and statistically significant relationship to bond market development and that in the emerging markets where there is a higher level of foreign investors and exchange rate volatility there are higher levels of bond market development. Policymakers should therefore implement policies that manage and reduce exchange rate volatility to support bond market development. These can include ensuring that central banks hold healthy levels of foreign exchange reserves to be able to support their currency in a crisis. Policymakers in unrated countries should also engage with reputable external credit rating agencies for foreign investors to have externally validated information on the sovereign's ability to meet its obligations and therefore increase the attractiveness of the local bond market to foreign investors.
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    Unlocking public and private finance for financial inclusion for individuals at the bottom of the pyramid in Mbare, Zimbabwe
    (2024) Horonga, Rutendo Fortunate; Mthanti, Thanti; Zolfaghar, Badri
    This study aimed to find the barriers faced by the poor in accessing finance, with a specific emphasis on Mbare, a small but bustling township in Zimbabwe known for its lively small scale businesses and markets. Recognizing the significant value of financial inclusion in addressing the large funding deficit was necessary to accomplish the goals of the 2030 Agenda. The research sought to delve into the realities of those living on less than $2.15 per day—a demographic that significantly contributed to this gap. We employed the logit regression method to quantify the extent of financial inclusion and understand the interplay of various factors influencing it. These factors included financial education, the availability of affordable financial services, branchless banking, women empowerment, the perceived role of different sectors in financial inclusion, the experience of the community with collaborative programs, and their awareness of private sector innovations. For data collection, 395 closed-ended questionnaires were distributed within the Mbare community. Out of these, 305 questionnaires were returned and subsequently analysed. The results of this research were pivotal in shedding light on the specific challenges and obstacles that the BOP population in Mbare faced in accessing financial services. The insights gained from this study inform and guide policymakers, financial institutions, Non-Governmental Organizations (NGOs), and academic literature in formulating and implementing strategies that effectively address these barriers and promote financial inclusion. This research represents a step towards understanding and enhancing financial access to the poor in developing countries, thereby contributing to broader efforts aimed at sustainable economic development and poverty alleviation.