Finance sector hits back
Transformation in spotlight ahead of ANC congress
SOUTH Africa’s banks have gone on the offensive after being criticised over their lending practices and records in addressing racial inequality.
Attacks have been led by President Jacob Zuma, who’s accused them of monopolising the financial services industry, and questioned whether they colluded when closing the accounts of the wealthy Gupta family, who are his friends and are in business with his son.
Parliament’s finance and trade and industry committees held hearings on racial transformation in the industry in Cape Town on Tuesday.
“The banking industry is not resistant to transformation,” Cas Coovadia, managing director of the Banking Association of South Africa, told lawmakers. “On access to financial services, we’ve made significant progress. We have training programmes in place to fast-track junior and middle management.
“We must acknowledge the journey we have been through.”
The country’s financial system is becoming a battleground as Zuma seeks to drive a programme of “radical economic transformation” that he says will move wealth to the majority black population in an economy still dominated by whites almost 23 years after apartheid.
Criticism of the industry has intensified as the ANC prepares for a policy conference from June 30 to July 5. The banking association, which represents Standard Bank Group, Nedbank Group, FirstRand and Barclays Africa Group, defended the industry’s record.
While the proportion of people with access to a bank account has increased to 77% last year, from 44% in 2003, lenders still discriminated against the poor by refusing to provide financial services in certain areas because they were deemed too risky, said Madoda Vilakazi, executive director of the National Economic and Development Council.
“Class discrimination is on the rise,” he said. “Poor people are more likely to be poorly treated.”
The banking association said that between 2012 and 2015, banks made R94-billion in financing available for affordable housing, R41-billion for small- and medium-sized black enterprises and R7-billion for black agricultural businesses.
Total consumer credit at the end of September amounted to R1.67trillion, of which R867.3-billion was tied up in mortgages.
The Geneva-based World Economic Forum ranks South Africa’s banking system among the world’s best. — TMG