Schreiber’s privatisation of Home Affairs functions continues with the addition of Capitec

South Africa’s Department of Home Affairs (DHA), under the leadership of Minister Leon Schreiber, has enlisted Capitec Bank and First National Bank (FNB) in a renewed effort to expand access to Smart ID and passport services.

Announced on 11 August 2025, this partnership marks a shift from a pilot programme that saw limited rollout across 30 bank branches to a more ambitious plan targeting 100 additional branches this year and over 1,000 within three years.

The initiative prioritises digital integration, with services to be offered through banking apps, aiming to reduce queues and phase out the green barcoded ID book by 2029.

The new model departs from the earlier, resource-heavy approach that required dedicated DHA staff and equipment in bank branches. Instead, it leverages a streamlined “live capture” system and enhanced interoperability between banks and DHA infrastructure. Schreiber, a Democratic Alliance (DA) appointee, has framed this as part of a broader digital transformation strategy.

Capitec, South Africa’s largest bank by client base with over 24 million customers, and FNB were the first to respond to the DHA’s April invitation to major banks. Details of their involvement remain undisclosed, with further discussions scheduled. Other banks have been urged to join, though none have yet committed publicly.

Capitec’s participation is notable given its historical reluctance to join the pilot, citing disruptions to branch operations and the need to prioritise banking clients. The bank, which operates nearly 900 of the country’s 3,300 bank branches, previously highlighted the lack of system integration and the burden of allocating space for non-banking services.

The digital-first approach, however, aligns with Capitec’s strengths in mobile banking, where 12 million of its clients are active app users. This could facilitate a smoother rollout, potentially bypassing the logistical constraints of physical branches.

The banking sector’s involvement comes amid concerns about market concentration, which some analysts suggest may foster informal cartel-like conditions. South Africa’s banking industry is dominated by five major players—Capitec, Standard Bank, Absa, Nedbank, and FNB—controlling over 90% of retail banking assets.

This oligopolistic structure, coupled with high barriers to entry and limited competition from smaller fintechs, has raised questions about pricing power and service coordination. While no formal collusion has been proven, the sector’s homogeneity in fee structures and product offerings has drawn scrutiny from regulators.

Capitec’s rapid growth, underpinned by its low-cost model, has intensified competitive pressures, yet the concentrated market continues to limit consumer choice and innovation.

Michiel le Roux, Capitec’s founder and a major shareholder, has been a long-standing donor to the DA, which oversees the DHA. His close ties to the party, including a personal relationship with DA stalwart Helen Zille, underscore his influence.

In 2019, Le Roux co-authored a post-election review with former DA leader Tony Leon and strategist Ryan Coetzee, which led to the party’s reorganisation and the resignation of then-leader Mmusi Maimane.

This political connection may raise questions about the impartiality of the DHA’s selection process, though no tangible evidence suggests impropriety.

The partnership’s success will hinge on its ability to deliver efficient, accessible services while delivering financial returns and useful citizen data to the banking sector.