Transformation and black economic empowerment (BEE) in South Africa’s financial sector must not jeopardise ongoing financial stability, Minister of Finance Trevor Manuel cautioned on Monday.
Speaking at the start of the Financial Sector Campaign Coalition Conference in Cape Town, Manuel said transformation must continue to unfold within an environment where the integrity of the country’s regulatory system remains paramount.
At the same time, he observed, the financial sector’s long-term sustainability is ultimately closely interlinked with its ability to reach all sectors of the South African economy.
“We want to expand and open our halls of finance. But at the same time we want to ensure that structures remain sound and continue to provide steadfast shelter,” he told conference participants.
“Effecting sustainable change in the orientation of the financial sector will demand thoroughness, diligence and a measure of patience. The room for change has been confirmed in the Financial Sector Charter … yet we must recognise that the financial sector is unlikely to respond well to mere populism.”
He noted that it does not help when financial institutions appear to agree to transformation demands, only then to attempt to transfer all of the risks to the fiscus. As a result, it is wise to pause and assess all of the potential risks and consequences of the government’s empowerment policies.
Going forward, banking institutions will be called upon to help other industries with transformation initiatives, such as the successful Mzansi bank account in financial services, that help to bridge the gap between the rich and the poor, Manuel noted.
“Likewise, we must make collective progress in the areas of investment into housing and small business, in a way that avoids the excessive shifting of risk from the private to the public sector.
“It is also morally and economically imperative for the sector itself to come forward with a proactive response to the problems of competition, disclosure and consumer protection identified in the banking and insurance sectors,” he added.
There is no inherent conflict or contradiction in ensuring a South African financial sector that remains both world-class and inclusive of all South Africans.
“The long-run sustainability and competitiveness of the South African financial sector is intricately intertwined with its ability to broaden its reach to all sectors of the South African economy,” concluded Manuel. — I-Net Bridge