One-third of South Africans live in rural locations, according to the 2011 Finscope Survey. According to the survey, only 46.8 percent of the rural population is banked, compared with 71.5 percent of South Africa's urban population. The reason for this unbalance is a lack of ATM facilities, according to one South African IAD.
"Currently, there are approximately 24,000 ATMs throughout South Africa and according to our calculations, well under 10 percent of these are located in rural areas," said Marc Sternberg, managing director of Spark ATM Systems. "The demand for access to cash in rural locations is on the rise and must be addressed, preferably by those operating in these areas so that the local economy can gain the most benefit."
The Eastern Cape, Mpumalanga, Limpopo and KwaZulu-Natal regions had the largest average withdrawal values for July 2012 according to the most recent data from the Spark Cash Index.
"It seems that the more rural a province is, the higher the average withdrawal size that people make," said David Wilson, senior analyst at IHS Global Insights. "One of the possible reasons behind this is the fact that rural areas are less developed and have fewer debit card facilities, therefore increasing the requirement for cash at most retail outlets.
"Not only does it cost rural dwellers additional money to travel to a bank or ATM located in urban areas, further reducing their amount of disposable income they can spend in the local economy, but it also presents a security risk to those people who have to travel long distances with their cash in their pockets," Wilson said.
Sternberg said banks often avoid placing ATMs in rural locations as they can prove unprofitable. "Rural ATMs do not process the same volume of transactions as urban ATMs. However, by installing ATMs on farms, community retail outlets or rural convenience stores consumers, consumers will be more likely to spend money at the location where they have withdrawn the cash, meaning the money will be filtered back to the local economy and therefore assist to boost development in rural areas.
"Furthermore, these locations provide a safe and secure environment where the chances of the ATMs being tampered with for the purpose of fraud are kept to a minimum due to the watchful eyes of farm or shop owners," Sternberg said.
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