17 October 2003
The Financial Sector Campaign Coalition (FSCC) regards the release of the Financial Charter as an important step in the ongoing struggle to transform and diversify the financial sector in our country. The Financial Charter is a direct outcome of the Campaign to Make Banks Serve the People launched and led by the South African Communist Party (SACP) since the 2000 Red October Campaign. The Financial Charter is an important victory for the SACP and the FSCC it leads, in that the financial sector concedes that the issues and demands raised in the Campaign are indeed valid. The charter is the single most important concession and admission that we were right when we said South Africa's financial institutions do not serve the people!
For the FSCC, it is particularly significant the Charter is being released today during the 2003 Red October Campaign, 4 days away from the 3rd anniversary of the 21 October 2000 marches to the Banking Council of South Africa.
While the Charter was not an outcome of inclusive and open social dialogue and also has significant shortcomings, the FSCC regards the Charter as an important step forward. Through the Charter, the financial sector commits itself to directed investment in, and extension of basic banking services to poor communities. A score-card that will rate banks annually according to a series of targets, in which social issues have a significant weighting, will be published annually by a Charter Council. Provisions of the Charter make it possible for financial co-operatives to build their capacity and receive support from the formal financial sector. These measures are welcome.
The Charter also marks a shift in the paradigm informing the financial sector in our country. In October 2000, many of the responses from sections of the media and the financial sector argued that the demands were impossible and could not be realised. Even in cases where there was formal recognition of the concerns and demands that the SACP originally raised, sections of the financial sector still sought to deflect the concern away from any consideration of substantial transformation. Now, the paradigm is shifting to how these demands can be met and how the financial sector can be transformed in fundamental ways. This fundamental transformation will require ongoing struggles.
"For the first time banks will be reporting annually not just to wealthy share-holders about profits, but to us, the broad public. This is an important weapon, it gives us collective leverage. We must use the score-card information to influence the decisions as to where our churches, our savings and credit co-operatives, our burial societies, our union affiliates, our municipalities, our government departments make their deposits", said Blade Nzimande, FSCC Chairperson and SACP General Secretary.
The FSCC welcomes the Charter commitment to accelerate human resources and skills development in the sector mainly through the transformation of the racial and gender composition of the workforce in the sector. However, this is not enough because the practices, policies, orientation and ownership of the sector need to be transformed and democratised in line with socio-economic growth and development imperatives. There is no point in getting more black and women managers who deliver more of the same anti-poor products and services currently dominant in the financial sector.
But the FSCC is cautious that as much as the Charter concedes the need to transform the financial sector in our country, things are not going to change without continued organised mass mobilisation and fundamental transformation which the Charter fails to address adequately for reasons detailed below.
We are particularly concerned about the Charter not catering for consumers earning less than R1 500 per month, including seasonal farm workers and recipients of state grants. Whilst we welcome that some of the banks have taken some steps towards catering for some of these sectors, that this is not firmly embedded in the Charter is a serious ommission. We call on the financial sector to immediately move towards addressing this very serious gap, and we will do all we can to ensure that this matter if fully addressed.
We welcome the Charter's commitment to ending all forms of discrimination in line with the Equality legislation in our country. We particularly want to highlight the plight of women, particularly black African women, who continue to be treated differently by the financial sector, essentially as "minors" to African males as it was the case under apartheid. We call for strong measures to ensure gender equality in access to financial services, and the Charter needs to be strengthened in this regard.
The FSCC is concerned that the Charter does not include the R100 000 automatic mortgage bond insurance cover that has been tabled at NEDLAC by the Life Officers' Association as part of dealing with HIV/AIDS discrimination in mortgage insurance. Beyond a general committment, the Charter also does not detail specific measures of how to deal with HIV/AIDS discrimination.
The Charter deals with specific measures to be taken by the financial sector to promote co-operatives in a cursory manner. Instead, emphasis is on narrowly defined BEE companies which will remain individual-owned and with insignificant impact in broadening the ownership base and developmental impact of the financial sector. The Charter must not be seen as an opportunity for narrow reforms which will only benefit a few whilst leaving the fundamental problems in the financial sector intact. Co-operatives are essential to transforming the sector and on the achievement of broad-based empowerment.
However, the Charter does provide space for engagement on the building of a co-operative banking sector, savings and credit co-operatives and access to, and training for, credit for co-operatives. The FSCC reaffirms that it will not allow the question of cooperative banking to be reduced to a charitable, survivalist and marginalised sector, which is the prime responsibility of the public sector to prop up.
The Charter does not go far enough to put in place a basic floor and charter of consumer rights and remedies to address discrimination pro-actively, effectively and to inform consumers of their rights.
The composition of the Charter Council is not clarified. For the Charter to be effectively and transparently implemented, the Charter Council must be broadly inclusive of consumers, labour, the community sector and other important stakeholders.
Most importantly, the Charter does not make any committment regarding the need for democratisation and transformation of retirement funds in order that workers control, own and decide how their retirement funds are saved and invested. The mere training of retirement fund trustees has proved way inadequate.
The FSCC does not believe that the nature of ownership of the financial sector will be solved through the Charter but through, amongst other things, ongoing struggles to build a co-operative banking sector, the consolidation of the public banking sector through PostBank and subjecting current ownership patterns to review and transformation. Already, significant shares in the financial sector are owned by public sector institutional investors and other institutional investors such as retirement funds who should be accountable to, and controlled by workers. The power of these institutional investors needs to be strengthened and in order that they may exercise their influence towards developmental investment by the financial sector.
In conclusion, the Charter provides a basis for further engagement with the financial sector and provides a massive challenge to take forward the struggle for the transformation and diversification of the financial sector in our country. This requires vigilance, mass mobilisation and pressure, transformative measures and programmes, government action, action by institutional public sector shareholders in the financial sector and intensified consumer activism. The FSCC anticipates the tabling of the Charter at NEDLAC for broader discussion as essential for the integrity of the process of implementing the NEDLAC Financial Sector Agreement.
This preliminary FSCC response will be followed by a detailed analysis, response and engagement at NEDLAC. The FSCC will work to ensure that the Charter and the NEDLAC Financial Sector Agreement are implemented in full.
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