Hearings on banks give facts a chance

Next week, there is an opportunity to clear the air about the state of transformation of our financial institutions. Parliament’s standing committee on finance will be holding the first day of hearings on the matter.

The facts can be put on the table, where they can be debated rationally. Rumour and innuendo, of which there has been much in circulation, can be put aside in favour of reality.

The banks, particularly, have been subjected to focused political pressure. This seems to be driven primarily by politicians and other public figures who are aligned with the Gupta family. And their main motivation appears to be the shutting of the Guptas’ bank accounts.

Who will forget Minister of Mineral Resources Mosebenzi Zwane falsely announcing a Cabinet decision to appoint a judicial inquiry into the banks over their closing of the Gupta accounts? Since his climbdown, any other mud that can be found is thrown at the banks, whether it is real or imagined.

The Competition Commission’s prosecution of banks for currency manipulation provided a handy weapon to bludgeon them with, even though two of our biggest banks were not even mentioned in the allegations.

The president has rejected an important piece of legislation governing money laundering, after representations from Mzwanele Manyi, a known Gupta associate. Parliament has since sent that legislation back to the president to sign.

The Bankorp lifeboat saga has been dragged out of history to accuse Absa of malfeasance, despite two judicial inquiries having cleared the bank of wrongdoing. The ANC Youth League in KwaZulu-Natal used the saga as justification to “occupy” several Absa branches.

This has all fed into the narrative of “white monopoly capital”, a phrase favoured by known Gupta associates on social media. All of this has been used by those with their own agendas, whether it is regaining access for the Guptas or pushing for a state bank.

The parliamentary hearings are an opportunity to get the facts and agendas out into the open. Everyone from the big banks to the South African Communist Party (SACP) will be presenting. Intellidex, the firm I chair, has also made a submission (available on our website).

When it comes to the real world of facts, there are some important ones that matter. The financial sector is crucial in the effort to transform SA. It has to ensure its own institutions transform, as well as using its capabilities to drive change in broader society.

The banks, insurance companies, asset managers and capital markets make up a well developed and capable infrastructure that is one of SA’s greatest assets.

The market capitalisation of the JSE, as a percentage of GDP, is among the highest in the world. Private sector credit extension, as a percentage of GDP, is above the average of Organisation for Economic Cooperation and Development countries. The sector does a good job of managing and investing the country’s savings.

It is capable of great things, such as mobilising R194bn of funding for the renewable energy programme – six times the money spent on infrastructure related to the Soccer World Cup – in just five years. When well-regulated and given the right incentives, the financial industry can have a transformative effect on our society.

It is also one of the largest sources of jobs and growth – the financial industry is second only to the government for the greatest growth in employment over the past 20 years. It has grown from 20% to 28% of the economy over that time.

The transformative capabilities of the banking sector were recognised in 2003, when the Financial Sector Charter was negotiated. All of the banks and other financial institutions committed to a set of hard targets for everything from the targeted financing of black entrepreneurs to banking infrastructure in rural areas.

The charter recognised that financial services have unique attributes: they underpin the systemic stability of the economy. The ownership of large financial institutions, which is dominated by foreign investors and pension funds, is part of the cause of their stability.

That has implications for debates over black ownership that some, particularly the SACP, find difficult to accept. However, almost all of the targets set by the charter had been met by 2008, when the time came to review it.

That review descended into a standoff with the SACP over ownership, leaving the charter in the doldrums and taking the pressure off. It has only just come back to life almost a decade later, following the gazetting of a draft new charter and codes last week.

The parliamentary hearing is an opportunity to reignite the momentum of the sector in pushing toward a transformed country. Parliament’s committees have recently shown their mettle in ensuring public interest is paramount.

The standing committee on finance has been an almost lone voice, demanding accountability over the social grants debacle. It could play a similar role in bringing out the facts about the financial sector and ensuring an outcome that is best for all of us.