The joint meeting heard the Department of Trade and Industry and National Treasury responses to the public submissions on the transformation of the Finance Services Sector. In addition, the EFF made a submission on transformation of the sector.
The EFF presentation referred to differences between empowerment and ownership and said that legislative reform was the only way of transforming the sector. EFF proposed that Parliament pass legislation that prescribed that all legal businesses in South Africa, including banks and insurance companies, should be a minimum of 50% owned by black people or the state. Gender inclusion was also a key factor. The National Credit Act was another piece of legislation that needed reform.
DTI responded that the financial services sector was unique as it was a key facilitator of transformation for the rest of the South African economy. DTI advocated a 10% target for direct black ownership but that the state’s assets should be managed by companies or entities that were a minimum of 51% black owned. B-BBEE should be strengthened and level 4 status made compulsory for listing on the Johannesburg Stock Exchange.
National Treasury confirmed that transformation of the sector was important but took a more cautious approach as it was aware of a lack of capital in the country, as indicated by the fact that four or five banks were up for sale but could not find investors, of any colour. Treasury also cautioned against government viewing pension funds as state money and warned of a growing desire by the retirement sector to move money out of pension funds. Treasury stated that it was important to understand the sector and that there were other ways of looking at financial transformation apart from simply ownership. A matrix of the ownership of capital in South Africa was in a draft stage.
Mr Y Carrim (ANC), the Chairperson of the Portfolio Committee for Finance opened the meeting, noting that the Chairperson and Members of the Portfolio Committee for Trade and Industry would be joining the meeting shortly as soon as their meeting was adjourned.
Presentation by Department of Trade and Industry
Ms Liso Steto, Acting Chief Director: BEE, Department of Trade and Industry (DTI), said that during the public hearings, DTI noted that the pace of transformation was very slow. The role of the state was to create an enabling environment for transformation. Ownership was a critical issue. She said that alternative banks and alternative ways of banking came out strongly. DTI found that consumer education was taking place. Competition within the sector itself and the issue of skills development was highlighted. She stated that diversification of value chains and the opening up of opportunities for people to operate within the sector was another matter. She said that the key was the lack of reliable data and DTI established a BEE Commission to work with all other institutions in the sector. DTI was adamant that the hearings had to speak to changes as they could not just go on and on. The process regarding changes to the Financial Services Charter was underway. The Charter was gazetted and after 12 months, it would be up for review. She explained that the financial sector was the fuel for the economy and because it played a role in other sectors, the ownership issue was important as it could be used as a lever for black entrepreneurs to grow. The Financial Services Board had a key role to play. Section 10 placed an onus on all state entities to consider the level of transformation before issuing licences. The very low numbers of black financial asset managers needed to be addressed.
She said that the banks held assets of R4 trillion that was important to the economy but there was a very low levels of transformation in senior levels in the banks, which needed to be addressed. Banks could assist by supporting and mentoring people. Even promoting the inclusion of blacks would be valuable. She said that DTI supported the proposal by the financial services to establish a fund to drive transformation. They were developing guidelines, which DTI would bring to parliament for scrutiny.
Mr Siphamandla Kumkani, Director: Credit Law and Policy, DTI, stated that following the hearings, DTI had a responsibility to follow up with certain issues that was raised. He said that one matter was that of consumer financial literacy training and another was whether there were any MoU’s between the Co-operative Banks Development Agency. The NCI confirmed that there was such a MoU. He said that as government agencies, those bodies had a role to play in providing consumer education. The DTI itself conducted consumer training, together with the agencies.
He said that credit providers was encouraged to partner with building materials suppliers and construction companies to unlock potential for funding on tribal lands. DTI was also looking into ways of collecting data on credit advanced to women and historically disadvantaged persons, especially for asset building and developmental loans. Legislation was clear that when a consumer paid up any judgement debt, consumers were entitled to have the judgment removed from the credit bureau lists but consumers had to be aware of the fact, and that it was not necessary to approach a lawyer to do remove their names from the list.
Presentation by EFF to Public Hearings on Transformation of the Financial Services Sector
Mr Floyd Shivambu (EFF) made reference to Section 9(2) of the Constitution which guaranteed “unfair discrimination may be taken” to advance persons who were disadvantaged under apartheid. He said that it was a colonial reality and it was legislated that black people could not engage in many aspects of the economy. It would not be possible to remedy the situation without legislating inclusion and black ownership of the economy. He said that there had to be a way of legislating that black people could own the economy and big businesses in South Africa. Economic participation should be legislated by providing for black ownership of existing businesses to a percentage reflective of the population statistics e.g. a legal bank in South Africa should have majority ownership by blacks, as should the companies on the Stock Exchange. To list on the Stock Exchange in South Africa, companies should have women participation, and black participation of at least 51%. He felt that white males dominated the economy. That could only be changed by legislation. DTI set aside a R5 billion fund for black inclusion but that was a joke. PIC paid more than R5 billion to increase its stake on the London Stock Exchange and yet DTI wanted R5 billion to support all 50 million black people. He said that the Public Investment Corporation (PIC) paid R26 billion to buy a stake in a liquor company. He felt that it was a dream that R5 billion was sufficient. Parliament had to use legislation to catch up quickly. The PIC had assets worth R1.8 trillion. PIC had to dispose of their shares to black people wherever they had an investment of more than 10%. PIC had to deploy black people to sit on the boards of the companies in which it invested.
He said that there was a need to set aside legislation that more than 50 % of a sector such as banking must be black-owned. Asset management referred to companies that managed pension funds. The pensions mostly belonged to black people but most were managed by huge cooperatives. He said that there had to be legislation to ensure black asset managers participated. He asked why banks repossessed cars or houses when the consumer defaulted after paying for a number of years. The banks sold the assets for dismal sums and the consumer still owed the bank. Bank should not be allowed to do that if more than 50% of repayment was made. There should never be a question that Parliament could not legislate for blacks to participate in the economy.
Ms Tobias was disappointed in Mr Shivambu whom, she believed, had not produced a document that offered specific examples. She said that two wrongs did not make a right. After the Second World War, governments pumped money into the economy, especially the agricultural sector, and the result was that they did not encourage companies to act on their own and diversify and so they had to put in protection rules because there was no creativity or competition in agriculture. However, she agreed that the EFF was raising a very good point that there should be a concerted effort to allow black people to participate and it was the Committee’s responsibility to make that happen. But he did not talk about the hedge fund market where black people were not participating, but should be participating. She said that there was a need to build an asset basis. However, the EFF proposal should say that there should be an incremental figure moving up from R5 billion. One had to be realistic about the budget. The idea was not to steal the money. One could not say to banks that one wanted to take its money to put in a pool. They were private entities. The Committee had to ask banks to assist. She met with banks and they had said they would give 40% if government put up 60%. That was where the EFF had to start. Government should go back to the banks. It was not the job of the Committee but that of the Credit Regulator. Loans had to be negotiated by the Credit Regulator. She said that the Credit Regulator should engage with the credit market to give women loans for business as well, not just houses. Rural people could not use their tribal land properties as security for loans. Municipalities had to properly evaluate tribal and rural properties, not under-evaluate properties as they did in the townships.
She said that people needed the loans to start businesses but they could not get loans because they did not have the collateral. There was a need to put timeframes on when they would get feedback from the DTI and the Credit Regulator to hear about the banks that they met with and to find out what they had done. Government could not fund everything because there were limited funds. Could the EFF please bring proposals regarding the specific amendments the EFF wanted to the Banking Act to the Committee?
She said that for a long time, DTI spoke about consumer education and it was time that they went to the masses and spoke to them in the local language. She asked about rescindment that DTI spoke about a long time ago, but the rescindment was still being abused. People were being abused. It was still happening. They took advantage of the clause that a person acknowledged the debt. She said that she was in action mode as the Committee needed to move forward. The EFF was to present the amendments to the Financial Act and the Bank Act to the Committee. The matter had to be concluded in six months.
Mr B Topham (DA) noted that the DTI was going to have discussions with the JSE. His concern was that DTI was speaking about specific levels of accreditation which was fine but they could not mess with shareholder’s ability to sell the shares. They did not want to get to the point where black shareholders were not allowed to sell their shares as that would be contrary to the purpose of empowering people. He said that a lot more detail was required on the EFF submission. There were two sides, existing companies and new registration for banks and insurance, but new banks and insurance would need to know who they could borrow money from who was not white as pension funds and international companies were apparently white. The EFF needed to be specific so that everyone knew what they were planning. Secondly, if the EFF wanted to radically change the existing companies, where would the money come from to buy off 50% of the banks. Who was going to pay foreign shareholders? And how was that to be done without sending a message that would send the currency into even more freefall and stop foreign investment, in which case, they would not be able to create any banks or insurance companies? It was easy to say, “wholly owned black company”, but what did it mean? The EFF could be limiting the size of the bank forever.
The Chairperson explained that each party could come with a written text and only Mr Shivambu came with a written text from the EFF, so they were responding to that. Nothing stopped any other party from speaking for 10 to 15 minutes. The Committee’s joint study group would present its own position in five minutes on Wednesday. The DA was invited to respond as it was not clear whether Mr Topham presented a party view, although it was useful.
Mr D Maynier (DA) declined to comment on the EFF proposal at that time.
The Co-Chairperson Mr Fubbs found the input informative and appreciated the reference to the housing and assets. It was long overdue that that was addressed. He said that repossession after extensive payment was a good point as the bank took everything back and then one still owed debt. After repossession, one should owe nothing. If the bank took something back, they took it with the debt or liability occurred. The Insolvency Act was a problem which was directly linked to the Credit Act but it fell under the Department of Justice and not under Finance and if something fell under Justice, one got the impression that the sanction fell on the victim. He felt that the recommendations needed to speak to the Insolvency Act which was a Dickensian piece of legislation and not a democratic one at all. The ownership issue was a problem given the Constitution which talked of ownership and the Committees might need to look at that. The reality was that ownership was allowed regardless of race or historical disadvantage so how did one correct the patterns of ownership within the current Constitution? Were you obliged to hold on to shares or to sell within the same gender or race? The principle of set-asides came close to addressing the problem and was not addressed sufficiently and would be an ideal mechanism to address some of the constitutionally closely contested issues.
The Chairperson asked Mr Shivambu whether he previously mentioned that 40% of all banks should be black owned as he was now not giving a percentage. Was it to allow the ANC to consider the idea and then determine a percentage? He asked Committee Members to think about the proposal. He was just facilitating but not taking a position as he did not have a mandate. He asked DTI if it could be done for the mineral sector and the mining sector, why could it not be done for the banks. Historically the banks and finance was part of a complex. He would like Members, especially ANC Members, to think about it and to state why they would not agree to a percentage. The EFF said that they did not like the previous Minister of Finance and they did not like the budget, but given the looming threats, especially of the downgrade, they supported the budget. Mr Shivambu said, after the budget, that the EFF was fine with the Minister then but would box him down the road when the balance of forces changed. Given the desperation for investment and the jitteriness of the banks, they needed to find some sort of balance between putting the provisions in law and doing nothing. The second option was to haul the banks before the Committee, show them the draft report and tell them what the Committee was proposing and ask them how they could make it happen if was not put into law.
He said that what was striking was how all regulatory bodies pleaded with the Committee saying that they were helpless and needed more money, but they did not use their powers. They were not doing their job. If the banks were not doing their job, neither were state entities nor was Parliament and the Executive. How did they calm the investors down? Could they not put in transitional figures and something that said that if they did not reach the target, after certain time, xyz had to be done? They could say that the Executive was obliged to put in targets within two years. There were various possibilities, taking into consideration the balance of forces. He said that if the economy was growing at three to four percent, there would be no problem. The Chairperson suggested that they present a report which would be a transitional process. They would give it a year and then give it more flesh. Everyone who participated in the hearings would be given one week and 1000 words to give input into the draft. He liked the idea of going beyond the Charter and putting it into law.
Mr Ismail Momoniat, DDG: Financial Policy, National Treasury, was asked to give input on the EFF proposal before making a presentation. The DDG believed that Members were asking the right questions and that something needed to be done. However, in looking at it, it was important to ask what would actually work, and how much could be changed. He learned the lesson of universal schooling which was hardly achieved, but the schooling system was in a crisis. This blockage had to be acknowledged. He said that the biggest move towards transformation would be to get the schooling system right. He learnt that legislation did not mean that what was desired was achieved. They should legislate but much more needed to be done.
He said that South Africa was a capital poor economy because the country did not save so the country was reliant on foreign capital. Many companies would love to re-domicile and leave South Africa. A perverse outcome of the BEE was that government was almost encouraging companies to leave South Africa which would mean an outflow of capital which would mean low growth and no jobs. He would have thought that the discussion in South Africa should be about how to get capital in the country to work better, how to get more capital from outside while getting people to save. To the extent that South Africa was reliant on capital, one shouldn’t do something so that what one feared, happened. He said that the Mining Charter did not work because it ignored the fundamental reality that no South Africans, white or back, had sufficient funds to buy a mine. He said that National Treasury was doing research into ownership patterns in South Africa and was excited to put forward the Ownership Monitor. Most companies on the JSE were at least 40% foreign-owned, some up to 80%, so the country was heavily reliant on foreign capital. Domestic institutional investors took up another 30% on average so the direct share in the economy was very small, i.e. 20 to 30%. The actual share was maybe 25% but the BEE model led to huge debt. Taking out the debt, black ownership was only one to two percent.
He said that ownership was not actually happening with BEE. It was a terrible model. Most investors were international investors and they had to keep their investors happy. Some people thought that there were easy solutions but that did not work. They could not “pretend and extend”. He said that the discussions were extremely powerful in shaping thinking. All parties were needed at the table, including big companies. There would not be immediate challenges but when mining licence was determined, the company would go to court and challenge the law, and government would be stuck in court. He said that implicit in giving a licence was an ownership right. When rights were not given, there would be an exodus of money. Investors would vote with their feet and leave. There were lots of applications to re-domicile. Should government open the tap and let people go? That was the issue of Anglo American that had such a big share in the South African economy. During apartheid, capital was stuck in South Africa because of exchange controls and investors could not take money overseas, which led to increases in ownership of everything by companies like Anglo American.
He said that National Treasury did not want to shut down the discussion but wanted to alert the Committee to the fact that were no easy solutions. Most companies in the Western world were white male dominated. How did they get enough women? Was legislation the way to go? Scandinavian countries legislated but there was a question as to whether legislation would solve South Africa’s board membership problems. The best way was to get the Charter working and to get buy-in from the captains of industry and from labour unions so that one knew where one would find resistance. Consensus would be better. He felt that Mr Shivambu was asking the right questions although his solutions would probably not work. There were ways other than by ownership to do it. There were many other elements such how they procured. National Treasury would like to approach it as a process, to get the vision and to monitor every year what progress was made. Government did not have a set of figures because there were different methodologies, each of which would result in different figures. In the National Treasury presentation, they would outline steps that could get the country back onto the road of serious transformation.
The Chairperson stated that the majority of the Committee and a number of people in the public hearings believed that the Financial Services Charter did not work and that a new one would not be enough. As parliamentarians, they could not have many meetings with Treasury. They needed to get things done. He could not disagree with National Treasury that there needed to be a process but the Committee had to seriously consider what Mr Shivambu was saying. The Committee had to say, at the very least, that if certain goals were not met within 18 months, then the Executive would be obliged to set targets. A private member’s motion would be brought forward if necessary. The Committee could not trust the Executive to do the things that it should. There had to be a trade-off between financial transformation and a social explosion. The Committee felt a need to create transformation. The Chairperson heard National Treasury but was not convinced by Treasury or the EFF and needed something in between. There was a need to clarify the issue of Section 10. The issues were no longer EFF issues, but those of the Committee.
The DTI responded saying that, with regard to ownership, there was a need to review the effectiveness of some of the legislation that they enacted. Some of the issues raised by the EFF were already legislated, such as Section 10 of the Act which was facilitated by Chairperson Fubbs. The law was amended to say companies must be BEE compliant but also that if a company failed to meet a specific sub-minimum of value created in black hands then the whole scoring in terms of BEE would be reduced. It was a careful balance that Parliament tried to impose in terms of level of ownership and other realities but it was law. It was legislated that one had to ensure a level of ownership and other nett value, i.e. ownership less debt. The reality was that there was no capital. At least for now a 10% direct ownership in the financial services was the bare minimum and it was already there. The PIC and other such institutions were critical because they had a status of transformation and they had BEE facilitation status which meant that what was bought was considered black as long as they would be owners in time and put in black board members, and that included women. DTI needed to look at some of the options for BEE status and for scaling up to ensure there was ownership in the black economy, but remembering the lack of capital to drive it strongly.
Mr Shivambu said that BEE created legitimate and morally accepted levels for companies to be empowered but there were no consequences for those who did not comply. There were no legislative instruments to deal with non-compliance. He said that the EFF was saying that there was a need to elevate transformation into legal instruments. To be a legal bank in South Africa, a certain percentage had to be owned by black people and women. It could not be left lose-ended or nothing would have changed in another 40 years and there would still be a racially skewed form of economic ownership and control. It was necessary to legislate black ownership and the inclusion of women. A study of the countries that industrialised post-World War II showed that they did not rely on Foreign Direct Investment (FDI). There needed to be a rethink about how late industrial developers caught up. Reliance on FDI was out-dated. He said that every country that subscribed to FDI did not develop and remained the same for 50 years. Korea invested its own capital, as did Japan. They did not need General Motors to build cars in Japan. They created Toyota. Japan patiently built up until Toyota became the biggest supplier of cars in the world. He said that those countries invested their own capital and gave it direction. There could not be a reliance on FDI. That was what had to be disrupted. He said that there was enough capital in South Africa, especially in pension funds, that were being put into useless investments. The government should re-direct those funds. The PIC, through the Government Employees Pension Fund, had R1.8 trillion. PIC had investments in Steinhoff and Pick ‘n Pay that would not collapse if they pulled out their investments.
Mr Shivambu said that he worked in the ANC Youth League for five years and believed that Ms Tobias was on the right of the ANC and so some of her contentions were unacceptable. The EFF document gave specifics regarding the Insurance Act, etc. The ANC was not opposed to it. Some Members, such as Ms Tobias, had conceptual limitations. The document did not specifically mention Hedge funds but Hedge funds were included in financial institutions. PIC owned property companies and sold 25% of a company called Pareto to a black consortium for R4 billion so people could easily get money from the private market with the principle that they were locked in and when they disposed of the investment, they had to sell to black economic role players. That was what did not happen with ABSA because when Tokyo Sexwale was in ownership of ABSA shares, he disposed of them to white investors, which reduced the amount of black ownership in ABSA. That was a key principle that had to be ring-fenced.
Ms Tobias responded to Mr Shivambu stating that in some of the assumptions that he made he made errors, even regarding PIC because he was not aware that all the funds that he was talking about were already invested. She complained about Mr Shivambu insulting others by saying that people could not conceptualise and their thinking was outdated while there was laziness on his behalf because he did not come with concrete suggestions, but just made statements. There was nothing new. The Committee’s role was not to point fingers, but to come up with solutions on a difficult but complex matter that colonisation created. She said that colonisation created a situation where empowerment was only for the few. The majority were at the bottom end. The Committee had to provide solutions and part of the solution was to include those who benefitted before because they were the captains of industry and they were holding the monopoly. It was necessary to negotiate with them and ask what they could put to what government had.
The Chairperson stated that some of Mr Shivambu’s ideas could be accepted by the ANC. He asked political parties to send insights and analysis to the Committee researchers.
Presentation by National Treasury
Mr Momoniat presented the response of National Treasury to transformation. He said that in the financial sector, there were preliminary inputs and hard questions that Treasury alone could not come up with solutions. He presented some initial and un-mandated ideas as he did not yet have a discussion with the Minister. There was a need for some sort of document, if not the Financial Sector Charter. He said that too few role players was included in the discussions. Unless everyone took ownership, they would raise all sorts of complexities. He recapped the Perspectives on Transformation as articulated in the Budget Speech of 2017. The litmus test of government’s programmes had to be what they did to create jobs, eliminate poverty and narrow the inequality gap. Transformation had to be mass-based and sustainable.
He said that National Treasury needed to hear the problems, such as licensing problems. National Treasury invited regulators to work with Treasury to resolve problems. He said that everyone was wanting something for themselves. Everyone had to be clear about what elements of transformation were wanted such as the de-racialisation of the financial sector, developmental and competitive, and the impact of transformation had to be transformative. He said that mechanisms of resolving problems were critical. A market regulator to focus on issues was important in resolving problems. The Financial Sector Charter and BEE Codes were broken. These institutions were “juniorised”; no one important attended meetings after the breakdown in 2008.
He touched on the origins and functioning of the Financial Sector Charter. The financial sector offered opportunities to get the Financial Sector Charter on the road. He said that National Treasury would not be ready in the current year as a number of meetings would be necessary. He presented a summary of BEE transactions in the banking sector where all lasted five years and then black shareholders sold their shares and had to pay back the loans that they took to buy the shares as per the BEE system. Shareholders gave up shares then, but they were not always willing to give up shares.
He said that in South Africa, the financial sector was large and sophisticated, consisting of banking and non-banking. It was worth noting that there were four or five banks looking for new owners and no one was rushing to buy. The problem was that there were no funds to buy the banks. The PIC managed pension funds and it was not government money. People wanted to take their money out of the pension fund. This was a general consideration in the retirement sector to take money out of pension funds.
The Chairperson noted that the technical information that National Treasury had was crucial. He asked Treasury to present their responses to the discussions.
Ms Katherine Gibson, Senior Advisor, National Treasury, said that she created a matrix of what each person said in their submissions. She observed that there were lots of overlapping issues and cross-cutting issues. Firstly, the Financial Sector Charter Code was dysfunctional and not working. Ownership and the principle of ownership was discussed. The principle of “once empowered, always empowered” was relevant as black ownership was closer to 5% versus the earlier 10%. She said that industry codes versus ownership needed attention. The Sector code should set higher standards but there had to be consideration of what would happen if the target was not met. Not all companies relied on government tenders so that was not always a lever. Asset managers were very important.
She said that secondly, the industry was performing badly with respect to ownership and management. Treasury was looking to develop a database as one could not rely on available data. The JSE was another issue that had to be considered. Thirdly, South Africa needed more black industrialists and Small and Medium Enterprises (SME’s). Educational requirements were often a barrier, especially for older black salespersons, for example. Fourthly, the structure of the market was impeding transformation with the “old boys’ club” and vertical integration. She said that it should not just be about re-distributing, but also about support for growing new businesses. Fifthly, poor market conduct and weak inclusion hurt transformation. The right kind of credit was needed and the importance of developmental loans had to be considered. They needed to leverage financial technical developments. She said that capital allocation was skewed. A proposal was needed for the Financial Services Commission. National Treasury had draft data on ownership in the economy.
The Chairperson stated that the Committee needed a draft report to send to stakeholders. It was important that by the third quarter, they must have taken it through the House. The Committee could not say that it was too complex.
Ms Tobias noted that they received no data to date and asked whether a sub-committee of, perhaps, National Treasury could work on the data. Rather than taking the draft report to the Nedlac Summit, it should go to the Nedlac Technical Committee as that would be a team of experts. They could add substance to ideas that the Committee had.
National Treasury noted that they spent extensive time on ownership and suggested that there was a need to look at the BEE codes. Equity equivalents were important because in practice multi-nationals wanted to own their companies fully, but were prepared to consider equity equivalents. However, there was no clarity in this space. The sanction was that you could not sell to government. The car industry was not BEE compliant so they had to export cars. Government had to recognise the indirect shareholders of the pension funds.
- a need for common and comparable data
- targets should be revisited, especially for asset managers
- CEO’s had to get back into the process
- steps had to be taken to improve monitoring
- black industrialists and SME’s had to be promoted
- new entrants needed support as it was hard to compete
- procurement had to be addressed
- better access to more affordable funding
- regulations had to be tailored to take account of an explicit developmental framework for the financial sector and licensing should be tiered
It was a question of the safety of the system versus access to the system.
Mr Shivambu was interested in National Treasury giving a consolidated view on transformation in the sector. The Minister of Finance said that he would like a plan for supporting transformation in the financial sector and would support a parliamentary process for transformation and so, it was best to ask the Ministry to make a presentation as there was a disjuncture with his Department. Some of the issues required a political perspective so it was not fair to expect officials in Treasury to take that approach. They needed to know the political view, even if they were dismissive of it. There was a need, as the Portfolio Committee on Finance, to get a consolidated position on who owned and controlled capital in South Africa, not just in the financial sector. Everyone who presented provided figures to support their own position. The Committee needed an independent view and a technical team needed to put together a comprehensive report. He was looking for common, fair and above-board data. If the Committee put a target, it needed to know where the country was moving from.
Mr D Hanekom (ANC) said that National Treasury and DTI responded to hearings and put forward proposals. He felt that Mr Shivambu came with proposals that warranted serious thought. The Committee needed to work out how it was going to be doing it, and who was going to be doing what in order to take out the things that they wanted to take out. The legislators needed to oversee the people who should be doing and there was a fine line between overseeing and doing. Transformation of the Financial Sector was the most important policy issue facing the Financial Committee. What kind of financial sector to do what, to benefit whom and how could one achieve it? National Treasury’s proposals regarding the Financial Sector Charter Council which was there to oversee BEE were fine, but what about the shortcomings of BEE. What were they and how could they be overcome? The Committee needed to identify flaws and find the mischief. Was the Sector Council appointed by the Minister? If so, the Minister should give it a clear mandate. It could not just be juniorised. The problem needed to be addressed. How would they get the best out of the Council? Mr Hanekom thought that the EFF gave it a good opening shot. It was an abnormal situation when even the EFF did not have sufficient confidence in the state entities. State ownership was problematic and not the answer that the Committee sought. At that time, it was not an option.
Ms Tobias requested guidance in respect of the Financial Services Commission and which approach they should take. Could the Committee have direction? A meeting was needed with the Co-operative Banks Development Agency (CBDA). The Committee needed data from the actuaries who made the presentation and from the vehicle towing people.
Ms P Kekana (ANC) noted that a meeting with the Minister was required as certain things needed to be driven politically. The involvement of the Trade and Industry Committee as well as DTI and National Treasury working together created positive synergy. The right hand and the left hand were speaking to each other and it was a useful process. National Treasury should continue its engagement with DTI as it worked through the final report. She believed that the Nedlac Summit would attend to the Financial Sector Charter limitations and the improvement of the B-BBEE Code as well as the data that was required. The Summit was crucial. CBDA was important and there should be consideration of the shape and form.
The Chairperson queried the date for the Summit. He thought that it was March 2018. Elements of what the Committee discussed was visible in public hearings. At the next meeting, he wanted some ideas and suggestions from Committee Members. He expressed disappointment in the National Treasury response. He felt that Treasury was just putting forward questions and not expressing its view. The exchange was not helping the process to go forward. What were the possibilities from Treasury for the next meeting? National Treasury was capable of more. He felt that there was a hesitancy to do some of the things that the Committee would like to see happen. The term ended for the House around 21 June but for Committees, it ended on 28 June 2017. The Chairperson wished to adopt the report by then but he thought that it should be possible to get the first draft done by the third week of June and to get replies by mid-July and to get the report out by August. He wanted to issue a press statement so the public knew what was happening and that the Committee was working on the matter. He believed that it would be wise to issue a transitional report with targets and to return to it in a year’s time.
Ms Tobias reminded the Chairperson that the process of the collation of inputs would take some time.
The Chairperson thanked National Treasury for the presentation, noting that he was not criticizing individuals in Treasury but was concerned about the hesitancy.
The meeting was adjourned.