Financial sector feels the heat
• MPs push for far-reaching transformation measures, while Treasury stresses buy-in through a joint process
Momentum for the radical transformation of the financial sector is accelerating, with MPs pushing for far-reaching measures, such as greater black control of banks.
Momentum for the radical transformation of the financial sector is accelerating, with MPs pushing for far-reaching measures, such as greater black control of banks.
There is broad agreement that the Financial Sector Charter is not meeting expectations and that the sector — which includes banks, insurance companies and asset managers — has performed poorly against the commitments made in 2002.
The EFF has proposed legislating for a minimum level of black and female ownership of companies in the sector.
Standing committee on finance chairman Yunus Carrim believed that care had to be taken with such a proposal, given the perilous economic situation, in which investors were very “jittery”.
Carrim did not believe that another charter by itself would be sufficient and suggested that if the targets were not met voluntarily by the industry within 18 months, the government would have to legislate for this.
The Treasury has proposed that another Financial Sector Charter summit be held — possibly for the first quarter of 2018 — to thrash out a new programme of transformation.
In a preliminary presentation on the Treasury’s view of transformation, deputy directorgeneral Ismail Momoniat said targets needed to be revisited, black industrialists needed to have better access to affordable funding and regulations tailored to support new entrants.
He stressed the importance of the buy-in by sector players in a joint process to agree on outcomes and targets.
Momoniat agreed that ownership and management levels of the sector were appalling and noted that black ownership had declined to below the 25% target set in the charter.
The Department of Trade and Industry proposed that a compulsory minimum broad-based black economic empowerment level four status be required as a condition for listing on the JSE and other stock exchanges.
Penalties should be imposed on companies that do not comply with management and employment equity targets.