A mechanism to determine the ability of the financial services sector to fund black economic empowerment is likely, according to a report in the forthcoming issue of the Institute of Bankers’ SA Banker magazine.
The mechanism was proposed to allay overseas investors’ fears about transformation of the financial services sector in South Africa.
The leaked charter for empowerment in mining panicked international investors on the JSE Securities Exchange in July 2002. To prevent a similar scenario around financial services, a task group of key industry players, including unions and
government, has been working on a framework for sector transformation.
Issues at stake include ownership of institutions, human resources, equity, board room control, access to the financial services for the unbanked, procurement policies, targeted investment which includes low income housing and infrastructural finance, small, medium and agricultural finance and socially responsible investment.
The sector’s task group representative is the Banking Council of South Africa’s general manager of transformation, Cas Coovadia.
He told SA Banker magazine that while the sector BEE charter was still under discussion, an announcement on empowerment targets over five years was expected at the end of September.
”Since the sector will be expected to do a chunk of the funding needed across the economy, I think it will propose a mechanism to determine its ability and capacity to do this.”
The same issue of the bankers’ publication carries a report of a recent speech by the chief executive of the Banking Council, Bob Tucker, in which he says the sector has to get banking services through to the vast majority of the people of this country.
”Of all of the transformational needs that is probably the most demanding and the highest imperative. That has got to happen,” he said.
Tucker is also reported as saying, ”What we are increasingly appreciating is that if you are going to do it effectively, you can only do it on a cooperative basis. It requires high volumes and it has got to be done very differently. It is no use taking the same old product.
”This issue of how we deliver banking services through to all the people of this country is itself going to have a very significant impact on the way that the banks actually function.
”The intensely individualistic, competitive approach is going to have to be moderated and result in what is essentially a very cooperative venture that runs across the banks, both existing and new.” – Sapa