South Africa

Reporter’s Parliamentary Notebook: The ‘myth of white monopoly capital’ and some VVIP bums on seats

By Marianne Merten 14 March 2017

With one simple question, parliamentary veteran Joan Fubbs, chair of the trade and industry committee, cut through the sunshine spin of the banking sector. What are the assumptions underlying the figures on, for example, black ownership and value of assets, she asked, because those numbers do not add up. Before Fubbs’s intervention during Tuesday’s public hearings on financial sector transformation, it had been the EFF that had questioned the presentations by the South African Banking Association (Basa) and three of the commercial banks, describing these as “extremely dishonest”. By MARIANNE MERTEN.

EFF Chief Whip Floyd Shivambu asked each of the CEOs of three commercial banks present during Tuesday’s public hearings on financial sector transformation – Absa, Standard Bank and the owner of First National Bank, First Rand – about their percentage of black ownership, outside of institutional and foreign owners. It amounted to 6%, 3% and 5% respectively, rather than double-digit percentages cited earlier, he argued: “There’s no serious black ownership in the financial sector. We can’t sit back and fold our hands… That’s why we should legislate.”

Earlier the banks’ CEOs told MPs about progress made even as, of course, more progress needed to be made. Their presentations highlighted their contributions in empowerment, including BEE deals that generated billions of rand for previously disadvantaged South Africans, support of black small, medium and micro businesses (SMMEs), support for procurement by black companies and that the majority of their employees are black, or “ACI (African, coloured, Indian)”, at least outside of senior and top management ranks. Overall, and without exception, the emphasis was that banks hold several hundreds of billions of rand each in deposits from individuals, businesses and corporates.

Basa Managing Director Cas Coovadia rattled off numbers. South Africa’s 36 banks, including two co-operative banks, held assets worth R4.8-trillion. In 2015, 195-million debit card transactions were processed and nearly 900-million EFTs.

The top six banks were 49% foreign-owned, 34% owned by South African institutions like pension funds and the Public Investment Corporation (PIC), and the remaining 17% by various categories of investors. And in 2016, black ownership on the Johannesburg Stock Exchange (JSE) was 23%, surpassing for the first time white ownership (22%), in what Coovadia said was a fact that dispelled the “myth of white monopoly capital”.

That Maria Ramos, the CEO of Barclays Africa, trading as Absa in South Africa, First Rand CEO Johan Burger and Standard Bank CEO Sim Tshabalala made presentations at Parliament’s financial sector public hearings is an indication of how seriously this topic is taken. Also sitting on the green leather benches of the Old National Assembly was Nedbank CEO Michael Brown, although that bank will have its turn only next week.

The talk was of white monopoly capitalism, the short-hand used in some circles to support ANC talk on its radical socio-economic transformation. Financial sector transformation is, at least in public commentary, seen as crucial to this. Or as President Jacob Zuma recently told traditional leaders during his address to the National House of Traditional Leaders: “Access to economic power is a key grievance of our people at this stage of our liberation… We addressed the political power. We can vote, we can make laws. The economy is not in our hands. We are not in control of economic power.”

All this unfolds amid complex manoeuvring around the National Treasury – it has publicly called for an end to slogans and for transformation to be sustainably mass-based to benefit more than just a few – and its role in the allocation and regulation of public expenditure. Yet the ANC policy discussion documents released on Sunday seem rather light on banks and the financial sector. The economic transformation discussion document talks of “building on and strengthening” the sterling reputation of South African banks and the financial sector. “A state-owned bank, possibly based on a transformed Post Bank, can serve to widen access to banking services for many and can assist in changing the structure of South Africa’s financial sector,” the document adds.

Tuesday’s parliamentary public hearings came as another financial sector summit is planned for mid-2017. There has been public acknowledgement from statutory bodies like the National Economic Development and Labour Council (Nedlac) and government departments like the Department of Trade and Industry that financial sector transformation had run out of steam around 2012 when disputes arose. Or as National Treasury tax and financial sector policy boss Ismail Momoniat put it: “It’s almost like the Financial Services Charter [it sets transformation goals] died a death… Although revived, it’s a tick-box approach”.

MPs had some tough questions for the CEOs. But none of those came close to unsettling those used to dealing with tough situations, whether in boardrooms or elsewhere. And so, swatted away was ANC MP Sifiso Buthelezi’s question as to why banks allowed a white mother company to set up a black company to receive money which just hours later is transferred to the mother company. If you know of this, report it – this is fronting and it is criminal, the MP was told.

Of course, there is another side. Even within the financial sector. And so the Actuaries lekgotla told MPs how transformation could be manipulated, even through salary bands. At R450,000 a year, apparently one is a senior manager but does not necessarily have a say in decision-making. What was the point of having a black CEO if legitimate grievances are suppressed?

The Black Business Council had its own agenda, including a blunt call for 51% of black ownership in new insurance licences and that R30-billion is made available to black industrialists in a joint initiative between government and the financial services sector. “It is possible for the financial institutions to create change in our country. By doing that, we create new wealth, we create new players. Unless we do that, there will be upheaval,” said council president Danisa Baloyi.

Trade union federation Cosatu put the focus firmly on South African citizens in its argument that the financial sector had failed to transform meaningfully. The sector needed to address the wage gap – “bank CEOs make R30-million and a bank cashier R60,000” – end the growing trend of outsourcing to labour brokers and embark on significant financial and banking literacy education.

Cosatu understands that government is preparing a bill to better regulate charges set by the financial sector. This is indeed welcome news… However, it needs to be biased towards the needs of ordinary consumers and empower government to deal with banks who consistently overcharges consumers,” Cosatu said.

Tuesday’s public hearings showed just how different interests contend in a complex environment where slogans and political rhetoric overshadow policy-making. It’s unlikely anything will happen any time soon. DM

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