40 years later, still a bank for the WORK­ERS

Ubank be­gan as a sav­ings fund that pro­vided ne­glected mine work­ers with ba­sic fi­nan­cial ser­vices, writes Luthando Vu­tula

CityPress - - Business - Vu­tula is Ubank CEO

The year 1976 in South Africa has largely been viewed through a po­lit­i­cal lens com­mem­o­rat­ing the coura­geous youth who stood up and protested against Bantu ed­u­ca­tion.

But the im­por­tance of the year is not ex­clu­sive to the po­lit­i­cal cal­en­dar. On the com­mer­cial side, South Africa’s black-owned com­mer­cial bank, Ubank, con­ducted its first trans­ac­tion. It had be­gun as a sav­ings fund in 1975 aimed at pro­vid­ing ne­glected mine work­ers in the gold and plat­inum belts with ba­sic fi­nan­cial ser­vices.

Another mile­stone in the area of com­merce for black peo­ple was the achieve­ment by Pro­fes­sor Wise­man Nkuhlu, who qual­i­fied as the first black African char­tered ac­coun­tant in South Africa in 1976.

Ubank pre­vi­ously op­er­ated as Teba Bank and, be­fore that, as Teba Cash Fi­nan­cial Ser­vices. It was es­tab­lished when many black peo­ple did not have ac­cess to fi­nan­cial ser­vices. A year be­fore the birth of Ubank, the Na­tional African Fed­er­ated Cham­ber of Com­merce started African Bank to op­er­ate as a sav­ings and loan in­sti­tu­tion ser­vic­ing black peo­ple who needed credit and an op­por­tu­nity to save.

Ubank was born out of The Em­ploy­ment Bureau of Africa (Teba), which was in­volved in the re­cruit­ment of black mi­grant labour for the South African min­ing in­dus­try. The bank is owned by a trust man­aged by trustees elected by the ma­jor­ity union – the Na­tional Union of Minework­ers – and the Cham­ber of Mines. The ben­e­fi­cia­ries of the trust are work­ers who are also cus­tomers of the bank.

Ubank was started at a time when black mine work­ers’ fi­nan­cial needs were un­der­ser­viced. In those days, there was no cell­phone or in­ter­net banking. Work­ers needed an en­tity that could fa­cil­i­tate the re­mit­tance of funds to their de­pen­dants in ru­ral ar­eas.

Mines were also sit­u­ated in out­ly­ing ar­eas, mak­ing it dif­fi­cult for work­ers to ac­cess banking ser­vices in ur­ban ar­eas. The low wages earned by mine labour­ers had made it unattrac­tive for large com­mer­cial banks to roll out proper banking branches at the mines. Ubank saw it as mo­rally cor­rect to op­er­ate branches on mine premises, in min­ing towns and in the ru­ral ar­eas where work­ers came from.

In 2000, Ubank be­came a fully fledged re­tail bank af­ter be­ing granted a banking li­cence by the SA Re­serve Bank. In its third decade – in 2006 – it had grown its sav­ings de­posit base to about R1.6 bil­lion and was ser­vic­ing more than 500 000 mine work­ers.

The open­ing of branches on mine premises saved work­ers a lot of money, in­clud­ing trans­port costs to the towns. As a pri­mary bank for mine work­ers, it pro­tected many work­ers who could po­ten­tially have fallen prey to un­scrupu­lous loan sharks. On the other hand, it gave work­ers an op­por­tu­nity to save their money in a safe and trusted en­tity.

In its his­tory, the bank has con­tin­ued to try to grow be­yond serv­ing the min­ing com­mu­nity. In 2008, it made an at­tempt to buy black-man­aged Meeg Bank, which was led by Nkuhlu and Dar­win Nkonki. How­ever, the deal did not go through be­cause Meeg Bank was taken over by Absa. In 2010, it dropped the Teba Bank brand for Ubank as part of its at­tempt to serve peo­ple out­side min­ing com­mu­ni­ties. Di­ver­si­fy­ing be­yond banking mine work­ers con­tin­ues to be its strat­egy.

In its his­tory, Ubank has not just op­er­ated as a bank that sim­ply ac­cepts de­posits and ad­vances credit, such as home loans, it has been in­stru­men­tal in en­sur­ing that mine work­ers and ben­e­fi­cia­ries re­ceive their pen­sion and prov­i­dent fund pay­outs. It has also been in­volved in track­ing and trac­ing ben­e­fi­cia­ries in ru­ral ar­eas, with field­work­ers phys­i­cally knock­ing on doors. The bank has paid mil­lions of rands to the Teba Fund Trust for so­cial de­vel­op­ment ac­tiv­i­ties, in­clud­ing launch­ing the Teba Bank bur­sary fund with the JB Marks Ed­u­ca­tion Trust Fund.

Over the past 40 years, Ubank has man­aged to re­main owned and man­aged by black peo­ple at a time when fi­nan­cial ser­vices firms such as African Bank, Meeg Bank and Fu­ture Bank fell out of black con­trol. This is some­thing to be proud of.

Ubank has truly de­fined what it means to be a black bank, not just through own­er­ship and man­age­ment con­trol, but through the way it op­er­ates and serves its clients. Ubank con­tin­ues to be part of many min­ing and black com­mu­ni­ties, with its staff ser­vic­ing cus­tomers in the African lan­guages spo­ken by clients in their re­spec­tive ge­ogra­phies.

Ubank is proud of its 40 years of ser­vice, and it is cur­rently in­volved in rais­ing cap­i­tal to bet­ter ser­vice its cur­rent and fu­ture cus­tomer base. It also in­tends to in­vest sig­nif­i­cantly in tech­nol­ogy, prod­uct de­vel­op­ment and dis­tri­bu­tion net­works.

PHOTO: LUCKY NX­U­MALO

LET’S CALL IT A DAY Mo­hamed Shameel Aziz Joosub, CEO and ex­ec­u­tive di­rec­tor of Vo­da­com, de­liv­ers the com­pany’s an­nual re­port on Mon­day. Vo­da­com and for­mer em­ployee Nkosana Makate, who is seek­ing com­pen­sa­tion for in­vent­ing the Please Call Me con­cept, are meet­ing reg­u­larly to try to re­solve what the cel­lu­lar op­er­a­tor owes Makate. Er­rol Els­don, the chair­man of Ster­ling Rand, which has helped to fund Makate’s case, said there had been a ‘cou­ple of meet­ings’ between Vo­da­com and the ac­tu­ar­ies and ac­coun­tants ad­vis­ing Makate. ‘We are seek­ing the records from Vo­da­com about what Please Call Me has gen­er­ated so far. They have been forth­com­ing, but it is a process,’ Els­don said. Vo­da­com’s Joosub said this week: ‘Vo­da­com re­spects the Con­sti­tu­tional Court rul­ing and will start dis­cus­sions with Mr Makate to agree on rea­son­able com­pen­sa­tion. It is re­gret­table that we ended up in this sit­u­a­tion. For our part, we are com­mit­ted to swift res­o­lu­tion, in line with the rul­ing of the Con­sti­tu­tional Court. In this re­gard, we have al­ready ini­ti­ated a process for ne­go­ti­at­ing rea­son­able com­pen­sa­tion for Mr Makate. The mat­ter is be­ing dealt with as a pri­or­ity.’ Till Stre­ichert, Vo­da­com chief fi­nan­cial of­fi­cer, said the com­pany could not pre­judge the out­come of th­ese ne­go­ti­a­tions. Vo­da­com had dis­closed con­tin­gent li­a­bil­ity in its fi­nan­cial state­ments re­gard­ing the Please Call Me case, Stre­ichert said. Last month, the Con­sti­tu­tional Court ruled that Vo­da­com was bound by the agree­ment con­cluded between Makate and the then di­rec­tor of prod­uct de­vel­op­ment and ser­vices, and that the com­pany was to ne­go­ti­ate in good faith with Makate to de­ter­mine rea­son­able com­pen­sa­tion. – Justin Brown

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