With the new year come interesting challenges for transformation in the financial services sector. These are not intractable problems yet, but it will depend on the willingness and commitment of the sector to transform itself and play its role in the socioeconomic transformation of society.
I outline three areas as key challenges in 2009.
The choppy charter waters
Failure to gazette the Financial Sector Charter (FSC) as a Sector Code because of the dispute about ownership provision in the codes. The dispute is important and deserves the discussions that took place towards the end of 2008. The extreme positions taken by some protagonists are worrying as much as the reasons for the positions taken.
We have to ask what the implications are for the delivery of transformation and its benefits on the ground. Further legal intervention in transformation is needed in the business sector because of its reluctance to be a partner in the process. Its reluctance has resulted in the failure of well-intentioned laws, such as the Employment Equity and Skills Development Act to deliver, which is why new legislation is needed. Now we hear that, unless the FSC is gazetted and the obligations legislated, the resolve to deliver will be undermined.
We have to ask whether the sector is a “willing transformer” or whether the state needs to administer sterner medicine. We can secure our democracy only by showing we can deliver material gains to the majority of people — people who by and large ensure the success of our businesses.
Global financial turmoil
The worldwide financial crisis creates a dilemma for business intent on being more financially conservative just to survive the crisis and subsist.
How will such an approach affect the resources required to make transformation a reality? Will business be a fair weather friend to this process and curtail the resources because of the crunch? This, of course, will be detrimental to the beneficiaries of this process, but will also have a negative effect on the brands that have been carefully nurtured by business to portray themselves as progressive, especially on the black empowerment front.
Milton Friedman’s well-known injunction that “business is there to create profits for the shareholders and not to waste money on social issues” could inform the thinking of some in business. It will be interesting to see how the new black shareholders react to this, as it would also be a challenge for them to see what their priorities are for the businesses they are interested in.
When retrenchments start and the “last in, first out” principle has to be considered, the most affected will be black managers. They will need to look at different solutions to preserve their newly found wealth. The survival of skills development, such as supporting academic, internship and learnership programmes, will come into question.
Black manager, what are you doing?
The role of black executives and managers in creating new cultures within business and finding new business opportunities is critical and requires confidence and serious commitment to understanding how new business works. They cannot continue to be on the outside looking in or be assimilated into existing cultures. While we often celebrate our diversity as a nation, diversity is not harnessed as a concept in business.