Picture: 123RF/FUZZBONES
Picture: 123RF/FUZZBONES

There is a popular story that says business is not committed to inclusive — even radical — economic transformation. It is wrong. The Banking Association of SA (Basa) has also long acknowledged that the present patterns of wealth ownership in the country are not sustainable and have their origins in apartheid and colonialism.

We fully support policies and legislation — such as BEE and employment equity — aimed at redressing the past and providing the poor and vulnerable with access to jobs, secure income and the opportunity to create wealth for their families.

We know that the business of banking depends on the economy growing and creating savings and wealth that can be shared among all South Africans. As chair of Basa, Mike Brown, the CEO of Nedbank has said: “We cannot run successful business in an unsuccessful country; if SA does not work then our companies won’t work”.

Our commitment to support growth and transformation of the economy is demonstrated by our participation in a number of initiatives that are currently underway. 

These include:

  • The South African SME Fund, which aims to support small- and medium-sized (SME) enterprises that demonstrate potential for rapid growth and employment creation.
  • The Youth Employment Service (YES) initiative, which aims to provide internship opportunities to 1-million young people over a period of three years. The interns will be paid by the private sector.
  • The black business growth funding initiative aims to provide up to R100bn dedicated to support black industrialists and the growth of black-owned businesses. This amount is likely to increase over the coming years. 
  • Providing emergency funding for state-owned enterprises (SOEs), so they can continue playing their critical role in the economy.
  • Mobilising infrastructure financing so that entrepreneurs can raise funding in the capital markets to invest in projects that help government meet its development objectives.
  • The renewable energy independent power producers (IPPs)  project has been a success, which demonstrates how government can enable infrastructure development — and how difficult policy uncertainty can make investment.
we would ask labour to accept that banks are committed to SA and working towards inclusive social and economic development in good faith

We are also gearing up to meet our commitments made at the jobs summit and the investment summit. We are exploring ways in which the financial services sector can support the stimulus package announced by President Cyril Ramaphosa and detailed in the medium-term budget policy statement.

These are substantial commitments. But, given the daily hardships that face the majority of South Africans and the social and economic challenges that face the country, there are often legitimate demands for banks to do more. However, this will come at a cost to our customers, shareholders, broader stakeholder community

Banks have a unique responsibility among the social partners that determine the course of the economy: they hold in trust the savings and investments of South Africans. These savings must be invested responsibly, so that the interest earned can provide for retirement, education and opportunities to accumulate wealth and property.

What is bad for banks is bad for the future

Banks also raise loans to invest in SA’s social and economic infrastructure, and extend credit to businesses, big and small, to enable them to expand, grow the economy and create jobs. And our customers are often our shareholders. The retirement and investment funds that provide for workers and others, are our shareholders. Do not be mistaken: what is bad for banks, is often bad for the savings of workers and the future of their children.

Banks have endured 10 years of sluggish economic growth, policy uncertainty, and low consumer and business confidence. The unemployed cannot save or afford loans; inequality means that only a relative few make use of many banking services; and poverty results in social instability, which undermines the business and consumer confidence needed to grow an inclusive economy.

However, we believe that SA now has an opportunity to boost the economy and correct a decade of under-performance. The jobs and investment summits, a responsible medium-term budget, and a commitment to clean, responsive government and policy-making, bode well for the future. But hard political and economic choices must still be made to make the difficult structural reforms needed to achieve tangible, inclusive economic gains and improve living standards for all. Key among these are the  government and public service increasing their efficiency and becoming more responsive to economic realities and the unintended consequences of their policies.

And, we would ask labour to accept that banks are committed to SA and working towards inclusive social and economic development in good faith. While we may have different political and economic interests, there are many practical programmes that can be implemented for the common good.

It is unfortunate that SA is heading towards a difficult, fractious election at a time of economic crises. Now more than ever, we need sober collective political, business and worker leadership, willing to put aside narrow self-interest and implement practical programmes that will improve the lives of all South Africans.

• Coovadia is MD of the Banking Association of SA.