Credit regulator is still at sixes and sevens

Reports that the Reserve Bank, the Treasury and the Department of Trade and Industry intervened in the National Credit Regulator’s (NCR’s) ham-fisted effort to slap African Bank with a R300m fine back in 2013 are surprising but not shocking.

The NCR has been the focus of a territorial battle almost since the day it was launched. The view that it should fall under the Treasury gains support with every befuddled intervention by this regulator. There’s no doubt, given the huge levels of indebtedness in this country and the unscrupulous practices of so many lenders, that there is a desperate need for regulation.

This is why there was much excitement back in 2006 when the National Credit Act came into effect, replacing the Usury Act. Sadly, there has been but much irritation about the way in which the NCR has overseen the implementation of that act.

It may be that the NCR’s brief is too broad. Its responsibilities include education, research, policy development and investigation of complaints. By most accounts it’s failing in almost all areas. The NCR has not only managed to antagonise the lenders but it seems not to have endeared itself to borrowers.

Some reckon being housed in the Department of Trade and Industry has aggravated the NCR’s lack of capacity and argue it should be transferred to the Treasury where there are — or at least were — executives with exacting standards. The department doesn’t think much of that idea; neither, it seems, does anyone at the NCR.

Supporters of the department believe, with some justification, that the Treasury will be too protective of the lenders.

The African Bank story is proof of just how ineffectual the NCR is. African Bank came forward with evidence of reckless lending. The NCR, which had had no successes up to then, latched on to it and slapped a R300m fine on an already unstable bank. It was hardly surprising that the Treasury moved decisively to rescue it.

It’s no secret that the defence industry is responsible, in some way or another, for a great deal of innovation.

The fact that SA’s defence budget was not a major casualty of overall spending cuts is therefore something of a small victory. Take JSE-listed small cap Ansys, which was started as a defence company in the late 1980s. Thanks to its history and ties to Denel, the company punches well above its weight on the innovation front.

Aside from its military products, Ansys has been quietly developing interesting solutions for the mining, rail, industrial and telecommunications sectors. One of those is an infrared broadband product, which is already being tested out by private and public sector clients.

The idea is to connect, for instance, a new residential estate to telecommunications infrastructure via infrared signals that can travel up to 1.5km.

It’s an interim measure while fibre cables are laid down between the estate and the base station — a process that can take months given the need for approvals and the time taken to dig up roads.

Once the permanent fibre connection is in place, the infrared signal then acts as a backup. Wits University is also working on the project, and the aim is to make the technology more efficient and the signals more capable of penetrating heavy fog and dust.

It’s a small reminder of why the defence industry is so important. Here’s hoping that Denel can get back on its feet.