South Africa has world-class financial architecture but faces the conundrum that the majority of the poor do not have access to these globally competitive financial services.
The wealthy have access to a variety of bank accounts, loan facilities, e-mail banking and now even cellphone banking.
But with more than six in 10 South Africans classified as “unbanked”, the challenge is to localise services while continuing to be globally competitive.
“People want banking services,” says Pat Horn of Streetnet, an organisation that supports the informal sector.
Previously, she led the South African branch of the Self Employed Women’s Union in Durban and saw first-hand the difficulties that traders experienced.
“Traders were walking around with large amounts of cash because of the high bank charges,” she recalls. “This prevents accumulation and the banks are also contradicting themselves because they also complain when people withdraw all their money.”
For three years now, Horn has been part of a campaign called the financial sector campaign coalition, which organises under the slogan of “Making the banks serve the people”. With support from the South African Communist Party, civil society organisations and trade unions, this campaign has lobbied the banks to change and now that may just change.
Last Friday, the banking and insurance industries signed the Financial Sector Charter in which they pledged to extend banking services to within a 20km radius of all communities. In addition, they will invest R75-billion in infrastructure development, black economic empowerment and low-cost housing.
“This charter marks a paradigm shift in the financial sector in our country,” said the spokesperson for the lobby, Mazibuko Jara, who also said the signing was a victory for the campaign, which first marched on banking councils three years ago to voice its dissatisfaction with the industry.
“For the first time banks will be reporting annually not just to wealthy shareholders about profits but to us, the broad public,” said the SACP’s general secretary, Blade Nzimande.
He urged communities to use the annual reports on the status of change that the banks and insurance companies have pledged themselves to publishing for the next 10 years as levers.
“This is an important weapon, it gives us collective leverage. We must use the score-card information [banks and insurance companies will rate their performance according to a score-card] to influence the decisions as to whether our churches, our savings and credit cooperatives, our burial societies, our union affiliates, our municipalities, our government departments make their deposits,” said Nzimande.
Every year, the government buys R180-billion-worth of services from the private sector — now it will use progress on the charter to determine who it will buy from in the financial services sector.
Accepting the industry’s pledge of change last week, Minister of Finance Trevor Manuel said he would keep both a political and a personal eye on the promise to extend services to poor areas. He had an aunt in Namaqualand, a poor and extremely remote region of South Africa, and he would check that she had access to a bank, he joked.
But Deena Bosch, a representative of the Women on Farms project that works to extend rights to female farm workers, said the long distances its members had to travel also excluded people from the financial system.
“And bank charges soak up quite a chunk of their income,” she added.
The charter is voluntary, but now that it has been agreed, it will become a public document gazetted by the government.
“The charters have veracity when gazetted. Voluntary is voluntary to a point, but the statute cajoles the process,” added Manuel. — IPS