FINANCIAL INCLUSION MATTERS
SRI MULYANI Indrawati, an Indonesian economist, once said: “Financial inclusion matters, not only because it promotes growth, but because it helps ensure prosperity is widely shared. Access to financial services plays a critical role in lifting people out of poverty, empowering women, and helping governments deliver services to their people.”
While Indrawati may have said this a few years ago while a managing director at the World Bank, and now she is minister of finance of Indonesia, her comments prodded me to ponder: After the Presidential Jobs Summit and the establishment of the Youth Employment Services and the Investment Summit over the past two months, what is the role of development finance institutions (DFIs) in helping us escape economic stagnation and poverty and leading us to economic manna?
Our economic development prospects can improve with the strengthening of capacity and leadership, and with the catalytic roles of DFIs such as the Industrial Development Corporation (IDC), National Empowerment Fund (NEF), Development Bank of Southern Africa, Small Enterprise Finance Agency, the Land Bank, the National Housing Finance Corporation, Independent Development Trust, National Youth Development Agency, National Urban Reconstruction and Housing Agency, Rural Housing Loan Fund, and Micro Agriculture Finance Scheme of SA.
The nation awaits clarity on how the IDC and NEF will integrate their strengths and enable the two institutions to meet the demand for funding by black entrepreneurs who aspire to become industrialists, while espousing good corporate governance.
Both the IDC and the NEF have been identified by the government as central in implementing radical economic transformation and development policies.
The collaboration will also promote broad-based black economic empowerment with a focus on promoting black industrialists.
This decision is in line with government policy to consolidate development finance institutions to provide effective support to emerging and existing black entrepreneurs, and thereby give black South Africans opportunities in the economy and help make the economy more dynamic, competitive and inclusive.
With the resignation of IDC chief executive Geoffrey Qhena and the possible merger of the NEF and IDC, any new entity with a new chief executive should continue with a mandate to boost growth, stimulate investment and create jobs.
Fortunately, women have been rising to leadership positions in DFIs and should continue to enjoy a fair slice of the main economy. They must be given the opportunity to lead and the necessary respect.
To achieve this, the ethos in DFIs has to continue the transformation.
Just as Wendy Luhabe and Monhla Hlahla chaired the IDC before Busi Mabuza now, women’s skills and potential must be recognised and treated as significant, and prejudiced systems must be done away with.
With good leadership and good corporate governance, DFIs are not only important in terms of their potential role and relevance in contributing to economic growth, but also for their potential to support inclusive economic growth.