Concerning reality for the economy

THE COMPETITION Commission has indicted at least three major banks for collusion and price fixing in the foreign-exchange markets.

This incident, coming hot on the heels of the Absa apartheid-debt debacle and another similar nefarious scheme by certain companies in the construction industry, is extremely concerning.

It is becoming clear that the concentration and oligopolistic nature of these sectors, like construction and banking, is proving to be a risk for the growth and development of our economy.

The rand has become one of the most volatile currencies, which has deterred investors and resulted in stunting the growth of our economy, thus postponing the creation of jobs.

The fact that some banks may have been partly responsible for the weak and volatile rand through currency manipulation is deeply troubling. The fact that this has been happening since 2015 just indicates how rent-seeking conduct has become embedded in the banking sector.

Oligopolistic markets will always provide a temptation for rent-seeking behaviour, and those people who seek to make super profits.

The Libor scandal in Europe two years ago is but one example of this behaviour, and the Myburgh Commission 10 years ago concerned a similar matter. There is, therefore, a need for a deep and fundamental transformation of the banking sector if South Africa has to maintain its status and image of being one of the top countries in terms of banking sector and regulation.

Nafcoc’s view is that not only should its ownership and management be broadened, but there must be measures to accelerate and increase inclusion of blacks and SMME sectors.