The Black Business Council’s (BBC’s) newly elected leadership wants to revive the lobby group’s long-held goal of establishing a black bank. In the past, the BBC had sought to make this a reality via the long, scenic route of applying for a banking licence.
In mid-August, the BBC elected, among others, Elias Monage (president); Gregory Mofokeng (vice-president organised business) and Yvonne Maitin (vice-president professionals) as the organisation’s new leaders. Kganki Matabane remains CEO.
But banking licences have stringent requirements. These are, after all, deposit-taking entities and thus strict regulation and high barriers to entry are par for the course. Moreover, the start-up capital costs of putting together a plausible proposition for a banking licence are steep. There are also many practicalities to consider. Indeed, acquiring a banking licence is no overnight endeavour, so admits the black business lobby.
After years of trying, the BBC is abandoning the traditional approach and changing tack. Many lessons have been picked up along the scenic route, chief among these being that acquiring a banking licence may not be the only option on the table for a black bank. Now, the black business lobby organisation is looking to channel its energies into acquiring a stake in existing banks, according to Matabane.
Over the years, the BBC has had several engagements with the regulator. Based on its interactions with the regulator, the organisation has come to the realisation that it’ll have better luck attempting to go the equity route instead of starting the process from the ground up.
From the BBC’s vantage point, “We have realised that if you start the bank from scratch, by the time you get approved it may have taken close to 10 years. We have realised that may not necessarily work,” says Matabane.
Not to be deterred, the BBC has sought the counsel of transaction and policy advisers to assess what other options are available for the organisation to pursue. Although there are seemingly viable prospects, the organisation has been advised against going to market with the news prematurely.
Matabane did divulge, however, that the BBC is giving serious consideration to African Bank. More specifically, the stake in African Bank owned by the central bank, which it has already indicated it is offloading. That is one candidate, among others, which is being weighed up. The BBC now views equity as a shorter route to its goal.
But equity, too, comes at a considerable cost. In previous engagements with the regulator, the BBC was informed that funding is also regulated. In simple terms, “You can’t go to another country, for example, China or the US, and come up with 100% funding from there. That won’t be allowed because it will dilute the local ownership aspect of a bank,” states Matabane.
That leaves the BBC with South Africa as a source market for funding its goal. However, the country’s funding pool is on the shallow end. “There are no black people who have billions lying around,” admits Matabane. As such, the black business lobby might tap institutions such as the Public Investment Corporation in search of funding.
In addition to the black bank, the new BBC leadership is bullish about asserting its influence on the Broad-Based Black Economic Empowerment Advisory Council and reviewing the black industrialists’ programme.
The council was established by the president. It is populated by individuals from business and other formations. Its term is coming up for renewal, and the BBC has raised its hand in a bid to obtain seats on the council.
“We are seeking representation so that the aspirations and the mandate of black business organisations are considered in all respects when you deal with the question of broad-based black economic empowerment,” says new BBC president Monage.
There’s also another practical reason the BBC is eager to have representation on that council. For starters, the council works closely with the BEE Commission. In particular, the council and the commission collaborate on fronting and other empowerment-related issues.
“We need that commission to have teeth to bite where there are fraudulent BEE transactions,” charges Monage. “We cannot sit and complain year-in, year-out about transformation.”
That “bite” would come in the form of blacklisting firms which fall foul of fronting, if the black business lobby group has its way. The BBC is of the view that instituting fines is not enough of a deterrent. Entities found guilty of fronting also trade with state-owned enterprises and other segments of the state. “That cannot be left unchallenged,” states Monage.
The new BBC president also concedes that there are many limitations with the black industrialists’ programme. Although the organisation championed the programme, its design resided elsewhere – and not with the BBC.
“Yes, we lobbied for that programme, [but] we didn’t design [it]. When we lobbied it was then hijacked in the process,” reflects Monage. Here, too, the black business organisation seeks to assert its influence anew.
A black bank, blacklisting BEE fronters and addressing design flaws in the black industrialists’ programme, among others, are at the fore of the new BBC leadership’s priorities. BM/DM