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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Industry Charters

Financial Sector Charter on Black Economic Empowerment

3. The challenges facing the financial sector

 

3.1 In most economies the financial sector plays a central role in enhancing growth and development. The South African financial sector is generally recognised as world class in terms of its skilled workforce, adequate capital resources, infrastructure and technology, as well as a conducive operating, regulatory and supervisory environment. However, the financial sector is confronted by a number of challenges which include the fact that:
• it is characterised by the presence of a few very large institutions. Many of the smaller and foreign institutions have exited the market in recent years;
• there are low levels of black participation, especially of black women, in meaningful ownership, control, management and high-level skilled positions in the sector;
• there has been an inadequate response by the sector to the increasing demand for access to financial services;
• the sector has not effectively provided credit to entrepreneurs, particularly black businesses;
• the national level of savings and investment is inadequate to support sustained economic growth and individual financial security;
• there is insufficient investment of the savings pool under the control of the sector into targeted investments of national priority;
• a large pool of funds circulates outside the formal financial system, including but not limited to funds held by stokvels, informal traders and in other forms of short-term savings;
• there has been limited support for new black firms in the financial sector by Government and the private sector; and
• they need to find meaningful ways to support the Proudly South African Campaign.

 

3.2 By addressing the abovementioned challenges, the financial sector will make a significant contribution towards economic growth, development, empowerment and reduction of inequalities and poverty in our society. The initiatives envisaged will also promote growth in the financial sector.

 

3.3 The growth and development of the financial sector is central to the successful implementation of BEE and is an overriding principle and objective of this charter. In order to enhance the financial sector's global competitiveness and to address BEE, the following imperatives must be satisfied:
• the long term financial stability and soundness of the sector and its capacity to finance economic growth and to facilitate domestic and international commerce must be maintained;
• the sector's ability to provide appropriate and effective access to financial services for a greater segment of the population must be substantially enhanced;
• a savings culture must be developed in South African society;
• the pool of intellectual capital in the sector must be improved by focusing on attracting new entrants and continually investing in the skills development and training of existing and new black professionals and managers;
• the development of black strategic and operational leadership must be fostered within the sector;
• diverse organisational cultures must be promoted to cater for a wide range of customers and to reflect the principles of inclusivity;
• the financial sector must promote triple bottom line accountability, including principles of good corporate governance;
• the representation of black women and black people living with disabilities in the sector as employees, managers, suppliers and owners of equity must be increased;
• champions who understand and are committed to transformation are required at the highest level within each organisation;
• the number and quality of black firms providing services and products to the financial services industry must be increased and competition amongst domestic firms improved;
• entrepreneurial development must be promoted and enhanced by supporting black entrepreneurs;
• the financial sector, which controls significant pools of savings, must be cognisant of the impact it has on directing savings towards targeted investments of national priority; and
• the regulatory environment and architecture of the sector must promote the empowerment objectives of this charter, lower the barriers to entry and facilitate competition.