SACP Welcomes NEDALC Summit on the Financial Sector

14 August 2002

The South African Communist Party (SACP) heartily welcomes the announcement by the National Economic Development and Labour Council that it will host a Summit on the Financial Sector on Tuesday, 20 August 2002.

This Summit is a direct outcome of the SACP-led Campaign to Make Banks Serve the People which was launched in October 2000. Through marches and pickets, the SACP supported by a wide range of organisations submitted memoranda of demands to government and the Banking Council of South Africa.

Despite delays in negotiations, the SACP is also pleased that there is substantial agreement on the following areas:

• Policy and Legislative Framework on Co-operative Banks
• Support for Co-operative Banks and Non-profit micro-lenders
• State Regulation of Credit Bureaux
• Lifeline Banking Services
• Capital Markets and Investments including prescribed assets
• Community Reinvestment
• Ending of discrimination in the financial sector including redlining
• The need to Review and Democratise the Regulatory Framework governing the Financial Sector
• Domestic Savings Initiatives
• The Consolidation and Strengthening of Public Financial Institutions (state-owned)

According to the NEDLAC Statement announcing the Summit, the draft agreements listed above will be finalised and signed at the Summit on 20 August. This NEDLAC Summit and the draft agreements are an important milestone in the campaign. The SACP believes that this NEDLAC Summit is not the end of the campaign. The 11th Congress of the SACP developed a framework to re-energise the Campaign focusing on building capacity to take forward outcomes of the NEDLAC Summit.

Summarised below are the demands submitted to government and the Banking Council in October 2000.

Summary of Demands on the Diversification and Transformation of the Financial Sector

In summary the demands submitted to government and the Banking Council in October 2000 were:

• Urgent steps to develop and pass appropriate legislation in order to establish adequate policy, legal and financial frameworks for the building and strengthening of co-operatives, co-operative and public banking sectors transformation and diversification of the financial sector in line with our country's developmental objectives+ADs- and community re-investment by banks.
• The urgent convening by the statutory National Economic Development and Labour Council of a summit on the financial sector by 31 March 2001. We also argued that this summit must be an inclusive stakeholder sectoral summit to map out a strategy to transform and diversify the sector and must address the following:
• The role of banks and of government in creating conditions for the more effective provision of financial services orientated to the developmental needs of poor and working people
• What needs to be done to encourage the emergence and growth of alternative institutions, including financial cooperatives, that might be more effective than the existing formal bank's
• To identify ways in which government owned financial institutions, like the Development Bank of Southern Africa, the Industrial Development Corporation,, Khula, the Land Bank and the Postbank can be made more effective in serving the developmental needs of poor and working people and the small, medium enterprises sector's and
• To identify legislative and other interventions that may be necessary to achieve transformation, diversification and regulation of banks and other financial institutions (including the insurance and the micro-lending industries).
• The urgent and immediate investigation of the functioning of the Credit Bureaus with the intention to developing appropriate legal measures in order to regulate the functioning of Credit Bureaus.
• Calling on the Banking Council and all its members to ensure the speedy and smooth enforcement of existing industry policy tools to address the lack of administrative justice racism (overt and covert) and all other forms of unfair discrimination.

Other issues and demands which have surfaced during the campaign are:

• Compulsory disclosure of performance around a range of specified development and community related activities e.g. involvement in SMME finance, low cost mortgage lending and support to cooperative banking. Elements of this approach already exist in the Home Loan and Mortgage Disclosure Act.
• The setting of targets around Community Reinvestment, through some specified system of awarding credits for CR performance and/or imposing penalties for non-compliance.
• Financial sector transformation also includes Prescribed asset requirements. This would require pension/provident funds, insurance companies and other funds to hold a certain percentage of their assets in the form of investments in prescribed development orientated activities.
• There are several themes we need to develop with regard to the demand for more effective regulation and transformation of micro-lenders.
• Is it desirable to insulate our economy from Speculative Activity by Financial Institutions?

CONTACT
Mazibuko K. Jara (surname Jara)
Department of Media, Information and Publicity
South African Communist Party
Tel - 011 339-3621/2
Fax - 011 339-4244
Cell - 083 651 0271
Email - mazibuko@sacp.org.za