After 44 weeks of talks changes were still being made at the last minute to win over labour and the South African Communist Party, which had spearheaded a three-year-long campaign against the banks and had found willing ears in a government preparing its first compulsory lending law — the Community Reinvestment Bill.
The charter commits its signatories to job-creating investment, to the Proudly South African campaign (a labour-led “buy-local” initiative), and to local procurement.
In a marathon 36-hour negotiating session in the same week, foreign banks were accommodated. This was vital because unhappy foreign investors were precisely what had given the mining charter a bad name, requiring months of damage control by the domestic industry and the government.
When the markets received the charter about eight hours later they hardly budged. Banking stocks, in fact, strengthened.
Later in the day came the the Congress of South African Trade Unions’s (Cosatu) verdict: “Cosatu welcomes the publication of the financial sector charter …. It is an important commitment by business to ensuring that the transformation of the financial sector benefits all our people.”
Finance union Sasbo (South African Society of Banking Officials) also welcomed the charter because of its balance between ownership and other factors, such as human resource development, said general secretary Ben Venter.
SACP leader and head of the Financial Sector Campaign Coalition Blade Nzimande claimed the charter as an “important victory [that] marks a shift in the paradigm informing the financial sector in our country”.
That such disparate constituencies gave the document the thumbs-up was testimony to the depth of negotiations that produced it.
Its midwives included business’s best brains — Standard Bank CEO Jacko Maree, Banking Council chairperson Bob Tucker and Old Mutual deputy MD Peter Moyo, who also leads the Life Offices Association (LOA).
Bolstering the back room was the LOA’s Debra Marsden, who is also a general manager at Old Mutual and an old hand from the National Economic Forum; Kennedy Bungane, a former student activist, now an executive member of the Association of Black Securities and Investment Professionals (Absip); and the Banking Council’s transformation manager, Cas Coovadia.
The negotiators could also hire the best. Facilitators Tefo Raditapole of the law firm Cheadle Thompson and Haysom and the International Labour Organisation’s Charles Nupen are top-drawer negotiators who helped break deadlocks.
The negotiation dynamic was also fundamentally different from the talks that preceded the charters in the mining and liquid fuels industries.
In these sectors the government sat on one side of the table, industry on the other. In the finance sector talks the debate was intra-industry — between the established and emerging generations.
Like any document of consensus and negotiation the charter has caveats and shortcomings. It pledges to provide access to financial services to 80% of low-income households, but leaves out those with an income of less than R 1 500 a month. The proposed financing of low-income housing, empowerment and infrastructure investment depends on effective risk-sharing with the government, which has not yet been decided.
Banks, insurers and the life offices have agreed to double the number of black junior, middle and senior managers in under five years, at a time of net job attrition in the sector — the banks shed between 3,5% and 5% of their labour between 1997 and 2002.
At the same time, the economy is choking from a dearth of highly-skilled black graduates; a trend that will impact on a sector that relies on a pool of such talent.
The sector is a conservative one to which change has come slowly. Of 4 878 senior banking officials and managers, more than 4 500 are white.
Most vitally, the charter is a voluntary document requiring political and economic will — often ephemeral qualities. It is precisely because of the nature of the sector that the charter is remarkable, Venter believes.
“Because it deals with money, banking is inherently conservative and structured.”
For its bosses and negotiators the charter is a revolutionary document that will change all policies from investment strategy to lending and hiring criteria, and even reporting.
While it is voluntary, the black economic empowerment scorecard will be the subject of an annual public report — by all signatory companies — that will be the sector’s peer review.
“The charter takes forward the notions of empowerment in ways I find satisfactory. Empowerment is not about this curious notion of passive shareholding — it is about human resource development, management and developing a new cadre of skills for the financial services industry,” said Minister of Finance Trevor Manuel, who added that the government would gazette the charter.
“The charters have veracity when gazetted. Voluntary is voluntary to a point, but the statute cajoles the process,” said Manuel, who said he would personally keep the sector to its goal of ensuring access to a financial service outlet (an ATM, bank or agency) within 20km of his aunt in Namaqualand. The industry has pledged to expand access to basic services to 80% of low-income households within four years.
It wasn’t a tear-jerker, like the tabling of the Constitution, but the signing and passage of the charter in the wood-panelled, old Reserve Bank building (now the Treasury) in Pretoria last Friday was a 21st-century moment of lasting economic and political significance.
The targets that were set in the 10-year-long scorecard to govern and guide transformation in the banking, finance and insurance sectors drew the first gasps of publicity.
But the economic importance and impact is that this is probably the closest the country has yet come, in a post-apartheid epoch, to an opening up of the “commanding heights” of the economy.
“I wasn’t part of Kliptown [where the Freedom Charter was signed] but last week I had a sense of what it felt like,” said Absip’s Bungane, who is also a director of Standard Corporate and Merchant Bank’s corporate banking division.
The sector, with a market capitalisation of R360-billion, is South Africa’s financial backbone. And in the post-apartheid economy, financial services contribute a growing proportion of gross domestic product.
The industry has committed itself to putting 25% in black hands and to spending at least R1-billion a year on black-owned small and medium-sized businesses in the next 10 years.
It is significant wealth transfer, backed up with an initial R75-billion to fund infrastructure investment, low-cost housing and black empowerment.
Politically, the moment marked a generation shift, as a new layer of leadership was revealed.
“With the exception of the veteran Bob Tucker I don’t think there was anybody older than 45 to 48 [present at the session]. This was a new generation of financial sector leaders, said Treasury deputy director general Lesetja Kganyago.
“We must remember, the process was initiated by the sector itself, [one] that reflected a change of generation in [the] leadership of the sector.”