/ 29 September 2008

‘There is a need to raise financial awareness’

Lerato Mametse, deputy chief executive of the Life Offices' Association, talks about the progress of the LOA in terms of the financial sector charter.

Lerato Mametse, deputy chief executive of the Life Offices’ Association (LOA)

How is the life industry progressing in terms of the financial sector charter?
The 2007 Charter Council annual report is due for release shortly. This will indicate progress across the financial sector in meeting financial sector charter targets. Without having seen this consolidated report it is difficult to comment in depth. However, overall, the industry is progressing well, based on the 2006 annual report.

Where do you believe the greatest achievements have been made so far?
From an LOA perspective, the finalisation of the Zimele product standards was a major achievement. Zimele, the brand aimed at helping South Africa’s low-income earners to easily identify life insurance products that meet the Financial Sector Charter [FSC] requirements, was launched by the LOA during the middle of February last year. The Zimele product standards for funeral cover were launched at the same time. In February this year the FSC Council sanctioned the LOA’s new set of Zimele product standards for credit life insurance, life cover and physical impairment cover.

The Zimele standards represent a step forward in increasing the participation of more South Africans in the financial services sector. But Zimele is about more than just products — it is also about raising financial awareness among the most vulnerable consumers.

Another success has been the LOA’s consumer education campaign, which has gone a far way in addressing issues of financial literacy in South Africa. In the past two years, the LOA has spent over R10-million on charter-specific projects and in 2008 an additional R6-million will be spent.

Have there been any obstacles or difficulties in reaching the goals of the charter?
One of the most important pillars of the charter, and unique to the financial services sector, is empowerment financing.

This pillar addresses the provision of finance or investment in targeted investment and BEE transactions. This includes projects that support economic development in underdeveloped areas and contribute towards equitable access to economic resources and include investments in transport, telecommunications, water, waste water and solid waste, energy, social infrastructure such as health, education, and correctional services facilities, and municipal infrastructure and services.

In the first two years of the charter, limited projects were available to the industry to allow these types of investments to take place. Deal flow is, however, improving and we will continue to engage government and the banks on making more projects available for our members to invest in.

Are there areas where the industry has fallen behind and needs more focus?
Again, this will be revealed by the charter’s 2007 report.

What is the industry’s view on increasing direct black ownership to 15%?
The LOA forms part of the trade association constituency in the Charter Council, which believes that the ownership target as set out in the charter should apply to the financial sector.

The LOA believes that the target as set out in the charter is appropriate and supports the principle of broad-based BEE and allows for financial resources also to be applied to other pillars of the charter, specifically empowerment financing and access to financial services.