23 January 2002
The South African Communist Party (SACP) is heartened by the call made by Comrade Barbara Hogan, the chairperson of Parliament's Finance Portfolio Committee, that the Financial Advisory and Intermediary Bill must be extended to regulate micro-lenders. This call is in line with the SACP-led campaign to transform and diversify the financial sector in our country.
The SACP is extremely concerned and disappointed that this Bill is extremely limited and far from sufficient even in its narrow intention of regulating financial service providers, let alone in the transformation and diversification of the financial services sector as a whole. We cannot just be dealing with one small aspect of the regulation of financial services in isolation from the transformation of the entire financial services sector which will cover banks, loan granters and the effective state regulation of the Credit Bureaux by the state. As the experiences of millions of South Africans show, the 11 Credit Bureaux in our country have essentially blocked access to credit for socio-economic development for millions of people in our country. Financial service providers and other credit grantors almost exclusively rely on information provided by the Credit Bureaux. Therefore, any effective regulation of financial services must include effective regulation of the Credit Bureaux by the state.
More importantly, the SACP is extremely disturbed that there is no comprehensive approach to establish a comprehensive and integrated regulatory framework for the regulation of financial service providers. Instead we have a fragmented approach which has resulted in many pieces of financial services legislation originating from different government departments with insufficient integration and alignment to the urgent imperative of transforming the entire financial sector in line with our country's growth and development needs. All of these pieces of legislation are just not responding to the fundamental challenge to transform and diversify the financial sector for economic growth and development.
The SACP had hoped for faster progress in this area after President Mbeki committed government, in his State of the Nation Address in 2001, to conduct a comprehensive review and regulation of the financial sector. We are disturbed that this is not happening even though the President made a clear commitment and call to government departments to kick-start this review. The fact of this Bill, which is mere tinkering on the fringes, is evidence to this lack of progress.
Because the financial sector in our country is failing to contribute to economic growth and development, the SACP has called for community reinvestment legislation, prescribed assets legislation, the restructuring of the Government Employees Pension Fund and the effective regulation of the Credit Bureaux. All these matters are now being negotiated at the National Economic Development and Labour Council (NEDLAC) in lieu of the NEDLAC Summit on the financial sector.
The mere tinkering which is characteristic of this Bill and the fragmented approach referred to above underline the urgency of the NEDLAC Summit. The SACP therefore urgently appeals to government to effectively link up with the NEDLAC negotiations and processes and to urgently move towards a comprehensive review of the entire regulatory framework of the financial sector with the aim of developing a comprehensive regulatory regime.
CONTACT
Mazibuko Kanyiso Jara (surname Jara)
Department of Media, Information and Publicity
South African Communist Party
Tel - 011 339 3621
Fax - 011 339 4244
Cell - 083 651 0271
Email- sacp1@wn.apc.org