Transform the financial sector to serve the workers and the poor, for job creation and sustainable livelihoods:
By Blade Nzimande, SACP General Secretary and Chairperson of the Financial Sector Campaign Coalition
22 October 2003, Midrand
Introduction
It is a great pleasure to address the Open Day for Teba Bank. We have accepted this invitation precisely because we believe that Teba Bank is playing a very important role in ensuring that the workers and the poor have access to financial services, in particular banking services. Let us take this opportunity to congratulate Teba Bank for proving, in practice that the poor are bankable and they are worth having access to affordable banking and other financial services.
Our Response to the Financial Sector Charter
Your Open Day is taking place during the month of October, which is a month during which we launch our Red October Campaign in 2003 to transform the financial sector to be in line with the demands of growth and development in a democratic South Africa.
The tabling of the Financial Sector Charter is an important victory for the SACP and the Financial Sector Campaign Coalition, which for the last three years have campaigned ceaselessly for the transformation of the financial sector in our country, in line with our growth and development objectives, and the challenge of job creation, sustainable livelihoods and communities, and poverty eradication. The Financial Sector Charter is a direct outcome of the struggles that have been waged by the workers and the poor, under the leadership of the SACP and the Financial Sector Campaign Coalition over the last three years. Without this pressure there would be no financial sector charter today. It is for this reason that we should use this occasion to detail our response to this Charter and provide the context against which to evaluate Teba Bank's own role in the broader challenge of transforming the financial sector in our country.
As the Financial Sector Campaign Coalition we welcome the publication of the Charter and some of its commitments to transform the financial sector.
The Charter is the single most important concession that we were right when we said the financial sector in South Africa is not serving the interests of the overwhelming majority of our people. We particularly welcome the Charter 's commitment to expand its services to cover at least up to 80% of those earning between R1 500 and R7 500 by the year 2008. This has been one of our major demands from the financial sector. This is the core of South Africa's black working class, which has previously been largely excluded from the banking services. We also welcome the commitment to extend other financial services and products (like life and other insurance products) to this sector of our society. However, we are still concerned that this measure still excludes those earning below R1 500, as well as vulnerable workers like domestic, farm, seasonal, casual workers as well as those receiving state social security grants (like the aged, children and the disabled).
Those earning below R1 500 constitute and estimated 30% of South Africa's population, and represent the poorest of the poor. This is a matter we are going to take up with the financial sector as we move forward in implementing the NEDLAC agreements and the Charter itself.
We also welcome the commitment to spend about R75 bn on targeted investments towards the poor areas, on infrastructure and towards job creation, including about R20bn earmarked for low-cost housing. Though this amount is not adequate to eradicate poverty, but it can be used to start a serious momentum towards job creation and sustainable livelihoods for the benefit of the overwhelming majority of our people. Together with the labour movement, government and other stakeholders, we are earnestly going to engage around how this money is going to be spent such that it has maximum impact on growth and development of our country. It must not be money that runs away with consultants or be used in such a manner that it gets re-channeled back to the established financial institutions without benefiting the workers and the poor of our country.
We also welcome the commitment to providing access to financial services within 20 kilometres of all areas of our country. This is a very significant commitment that may take us a long way towards accessible financial services for our people. We will hold the financial sector to this, and we are willing to partner to ensure that this does indeed happen. Commitment to racial and gender representation in management of the sector is an important step towards the overall transformation of the financial sector. However we are not only interested in colour and gender for its own sake, but for purposes of transforming the sector and ensuring that blacks and women who come in are committed to the agenda of transformation in favour of the workers and the poor of our country.
The establishment of the Charter Council, which will receive annual progress report from each financial institution in our country, provides an opportunity and leverage to ensure that the objectives of the Charter are implemented. We however insist that representation of consumers, communities and labour must be firmly entrenched through the Charter Council process, and that the Council is adequately resourced to be able to perform its oversight functions. However the Council must not be a substitute for our prime institution of social dialogue - NEDLAC - at which we also expect this Charter to be tabled immediately.
We however note with concern that there are still a number of gaps in the Charter. We have already noted the continued exclusion of those South Africans earning less than R1 500 per month. The Life Offices Association had also tabled a proposal for an automatic mortgage insurance cover of up to R100 000, irrespective of HIV status. We will pursue this through the NEDLAC process as a matter of extreme urgency, as many AIDS orphans are still deprived of roofs over their heads as a result of an absence of an effective mortgage insurance cover.
We also would like to see the outlawing of all forms of discrimination in the financial sector, and the Charter is not as specific and detailed on some of the issues as we would have liked to see. For instance the discrimination against black women when applying for financial services, as well the question of redlining. It is for this reason that we call on government not to scrap the Community Reinvestment legislation, but to use as a complementary and very important mechanism to ensure that the very objectives of the Charter are met.
The Savings and Credit Co-operative Movement and the role of the Financial Sector
We are not only demanding that the financial sector serve our people, but we are also committed to promoting the culture of savings in our country. We are acutely aware that savings in South Africa a very low if we are to achieve some of our growth and development objectives. However, it is not only enough to promote the culture of savings, at the same time it is absolutely necessary that those savers have an effective say and control of how and where their savings are invested, in line with our growth and development objectives.
We emphatically reject the call by some of the black elite that these savings should be used to promote a narrow black elite as the basis for meaningful black economic empowerment. We cannot allow a situation similar to that of the Afrikaner working class whose savings were used to create the AVBOBs, the Sanlams and a wealthy Afrikaner capitalist class, which no longer did it become rich and established, it abandoned that Afrikaner working class, and used its savings for its own narrow capital accumulation.
As the SACP and the Financial Sector Campaign Coalition we have committed ourselves to building a strong savings and credit co-operative movement.
We applaud the role that Teba Bank has played to prove that the workers and the poor are indeed bankable. We see Teba Bank as a very important partner in building a viable savings and credit co-operative movement. We would also expect the rest of the financial sector to play an important role in this regard. That is why we are also concerned that despite very firm commitments by the Financial Sector Summit in August last year and the Growth and Development Summit this year to the fostering of a co-operative movement, the Charter is very weak on this issue.
There are very specific needs in this regard. Most of the moneys allocated to train boards and managers of the savings and credit co-operatives as well as other forms of financial services co-operatives come from foreign donors.
This reality has a lot to do with the very collapse of FINASOL for instance.
When the Charter talks about human resources development, we will push for significant amounts of this money to be channeled towards strengthening and building the capacity of our stokvels, burial societies, savings and credit co-operatives, so that they run their affairs efficiently. After all, all these billions of rands collected from the workers and the poor constitute a very significant component of the resources of the established financial sector. This is one immediate area around which we would also like to engage and form partnership with a financial institution like Teba Bank. In addition, we would also like to engage Teba Bank in particular on how some of their systems (IT, payment systems, smart cards) can be used to support these co-operative ventures so critical in shielding our people from the worst forms of poverty.
As the SACP and Financial Sector Campaign Coalition, we see Teba Bank as a very strategic institution, which has been a trailblazer in banking the workers and the poor. The Charter for instance marks a very significant paradigm shift on the part of established financial institutions. When we started our campaign they all said, in a deafening chorus, the poor are not bankable. But now they say they are committed to come up with concreter measures to begin to bank the poor. This paradigm shift, we are convinced, is also due to the example that an institution like Teba Bank has set, that indeed the poor are bankable.
The SACP also welcomes the announcement that the Charter will be gazetted by the Minister of Finance in order that the Charter may be publicly debated.
The Urgent Need for an Appropriate Policy and Legislative Framework for a Savings and Credit Co-operative Movement
A key and outstanding challenge in the entire process of the transformation of the financial sector is the creation of an appropriate and conducive policy and legislative environment to support the broadening of access to financial services for the workers and the poor. We need an urgent review of the regulatory regime for the financial sector to ensure that it is able to deliver better services the poor. Such a review must principally focus on this particular aspect of broadening access to the workers and the poor.
Four issues come to mind immediately. Firstly, a conducive environment must be created such that workers have an effective say over their provident and pension funds. Secondly, the question of appropriate legislative and policy environment tailor made to build capacity for the PostBank to be able to provide a service to the workers and the poor. Thirdly, the whole issue of exemption from the Banks Act for savings and credit co-operative and other financial services co-operatives needs to be completely overhauled. What we need is tailor made legislation for these institutions to flourish and be able to play their appropriate roles.
Fourthly, the question of the loan sharks requires urgent attention. The high indebtedness of South African working class to the loan sharks is a ticking time bomb. We must move to effectively control and regulate these loan sharks. Our aim as the SACP is to destroy loan sharks and be able to provide accessible and affordable micro-credit to the poor for purposes of productive and developmental purposes.
In all these we hope that Teba Bank will be partner and has an important role to play in order to ensure that we truly transform the financial sector. We have confidence that Teba Bank has what it takes to move along with us to realize these goals. We are also convinced that Teba Bank, working together with our communities, is a partner for the future and has a very important role to play to ensure that our financial sector acts in accordance with our growth and development objectives as captured in the NEDLAC Financial Sector Summit and the resolutions of the Growth and Development Summit.
Once more congratulations on your work, and have a happy Open Day!
Blade Nzimande
General Secretary of the SACP
Chairperson of the Financial Sector Campaign Coalition
CONTACT
Mazibuko Kanyiso Jara (surname Jara)
Department of Media, Information and Publicity
South African Communist Party
Tel - + 27 11 339 3621, Fax - +27 11 339 4244/6880
Cell - +83 651 0271
Email - mazibuko@sacp.org.za; WEBSITE - www.sacp.org.za