The Portfolio Committee (PC) on Tourism received a briefing from the Banking Association South Africa (BASA) on its perspective of the support provided by the banking sector to the tourism industry, especially to small, micro and medium enterprises (SMMEs).
The Committee Chairperson said that people had a responsibility to ameliorate the consequences of the COVID-19 pandemic and to ensure that South Africa was prosperous, and that the current generation built the economy for future generations, so citizens would be free from unemployment, inequality and poverty. The Committee had deemed it important to have an engagement with the banking sector, as black people still battled to gain access into the economy via the tourism sector.
BASA said its membership base included the commercial, mutual and international banks operating in South Africa. It described the support it gives to all the sectors in terms of lending facilities and standard commercial products, such as overdrafts, commercial asset finance, term lending, mortgage-backed business loans and government credit guarantees.
It provided details of the COVID-19 Loan Guarantee Scheme, and commented that overall, the performance had not met expectations. The largest share of loans had gone to companies with a turnover of more than R1 million, and less than R20 million. What was disappointing was the that the companies with a turnover of less than R1 million had a very small share of loans, which indicated that a more diversified set of funding sources was needed in South Africa for those companies, because some of them were not able to meet the criteria. Although the numbers were not as high as had been expected, the scheme had reached small businesses, as was intended.
Members asked BASA about the Tourism Recovery Plan and the support that its members would offer to tourism businesses in the country's villages and townships over the next five years, to grow the economy in previously disadvantaged communities. It suggested that as tourists were keen supporters of the arts, BASA members should look at short-term sponsorships of artists to help them finance their events -- a proposal which BASA said it would consider.
BASA acknowledged that tourism was a critical sector of the economy, as it provided 1.5 million indirect and 740 000 direct jobs, while 80% of the players were small businesses. It agreed that it had a role to play in assisting rural and township tourism businesses, as they were not currently targeted.
Chairperson’s opening remarks
Chairperson Mahumapelo said that some Members would be joining the departmental budget processes in the National Council of Provinces (NCOP) later that morning. There was also a sitting of Parliament, so the meeting had to move at a fast pace because time was tight. He requested that he put his video off because he was in transit. Linked to that, he requested that Ms L Makhubela-Mashele (ANC) take over the meeting.
He welcomed the Members of the Portfolio Committee (PC) to this important meeting, and the delegates from the Banking Association of South Africa (BASA). He also welcomed all South Africans who had an interest in the matter who may be joining on the different platforms that were provided by Parliament, to make Parliament accessible, transparent, and to ensure that members of the public of South Africa and anyone interested could follow the discussions that were taking place in Parliament.
The Chairperson said that South Africa was undergoing the painful process of having to deal effectively with the effects of COVID-19. South Africans had to do everything possible to make sure that they ameliorated some of the consequences, which were a reality that were "going to be with us for the rest of our lives.” One of the responsibilities as a nation was to gradually build a South Africa that was prosperous, a South Africa that future generations could all embrace, because that future would ensure that people do not discriminate against people based on their colour, their creed, their sexual orientation, their economic standing in society, or where they came from.
Future generations would have to inherit from the current generation a South Africa where there was prosperity, and where the problems of unemployment would be almost gone. Inequality and problems of hunger or poverty would have been dealt with. That was part of the context in which the PC would be meeting with the banking sector today. It was having a meeting so that the PC could discuss how the banking sector played a role in ensuring that the future South Africa, from a tourism perspective, was being constructed today. The PC was meeting with the banking sector to look at what role the banking sector was playing in assisting people throughout the country to make sure that they could participate meaningfully in the tourism sector broadly, and in the South African economy.
Many of South Africa’s people, particularly black people, did not have the necessary collateral to access capital. Many of them did not have the necessary in-depth capacity to handle some of the complex transactions that related to participation in the economy. As a consequence, many black people found themselves in a situation where they still struggled to gain entry into the economy via the tourism sector. The PC was therefore meeting with the banking sector, those who control the borrowing and lending of money, to discuss what role the banking sector it was playing in making sure that the PC was at least helping people to create this non-racial South Africa.
The Chairperson noted that some of the Members would be joining the National Council of Provinces (NCOP) at 10am, and there was another sitting at 11am. He handed over to Ms Makhubela-Mashele to preside over the meeting. He would continue to be a part of the meeting.
Acting Chairperson Makhubela-Mashele welcomed colleagues to the meeting, and invited a representative from the Banking Association of South Africa (BASA) to present.
BASA presentation on tourism
Ms Bongi Kunene, Managing Director: BASA, introduced the BASA delegation:
Mr Muzi Mhlambi, Manager: Small and Medium Enterprises (SME) Portfolio;
Mr Hahangwivhawe Liphadzi, SME Researcher:
Mr Glenn Pratt, Standard Bank Personal & Business Banking SA / Small Enterprises Ecosystem Enablement / Manager: Sectors and Propositions;
Ms Kirosha Govender, Absa Group Regulatory Relations & Group Compliance;
Mr Kgalaletso Tlhoaele, Absa Head: Enterprise Development, Retail & Business Bank;
Mr Elton Govender, Enterprise Development Retail & Business Bank; and
Mr Jesse Weinberg, FNB Head: SME Customer Segment.
Mr Khulekani Mathe, Head: Financial Inclusion, BASA, delivered the Association's presentation. He noted that Capitec Bank was also represented in the meeting.
He said that BASA members were drawn from the commercial banks, international banks and mutual banks. (See page two for the full details).
The banks held R6.6 trillion of savings from the public. These assets were made up of 71% in deposits, 8% in shareholder capital, 11% in other liabilities, 6% in bonds, and 4% other borrowings.
The banks were the custodians of the salaries and savings of South African workers, companies, professionals and the public sector. Pension funds and the government were among those that trusted banks to pay their money on demand.
Every payment of a salary, bank transfer or use of a card in a store was handled by banks and the payments' infrastructure. There were billions of transactions each year, and they were managed seamlessly. R870 billion was handled every month in more than 100 million individual transactions. That was an average of R20 million every minute. (Source: Bankserv.)
In the year to March 2020, banks had reported 299 259 suspicious transactions to the Financial Intelligence Centre (FIC) and six million transactions that breached cash deposit thresholds. (Source: FIC)
Banks worked with regulators, primarily the Reserve Bank, to ensure the financial stability of the country and to protect savings. South Africa met international standards, which was essential to interact with the international financial system and raise funds in the rest of the world. Under the ‘Twin Peaks’ framework, the Prudential Authority, the Financial Sector Conduct Authority, along with the National Credit Regulator, were among those that regulated the business and conduct of banks.
To finance economic growth, loans were invested, and those investments went into expanding economic capacity, creating jobs and tax revenue in the process. The largest share of money BASA had was loaned out to customers. It also bought government and private sector bonds, which made up the total lending. He showed a chart which showed the type of loans, with mortgages (33%) and overdrafts, loans and advances (32%) making up the largest share.
Mr Mathe said South African banks had greater credit penetration than comparable markets, such as Turkey, Brazil and Poland. The credit market relied on the rule of law and property rights. Compared to sub-Saharan Africa, BASA was lending above its peers. It was lending to the economy, and was doing so on a par with, or better than, its comparable peers.
The financial services sector paid 36% of all corporate tax (R122 billion in 2019), despite making up only 23% of gross domestic product (GDP). The sector had increased employment by 50% since 2006, and now employed 2.3 million people, despite the increasing introduction of technology in their operations. The six largest banks employed almost 163 000 people.
Turning to the importance of tourism sector to South Africa, he said it was a critical sector that provided 1.5 million indirect jobs. The industry had 740 000 direct jobs, and contributed R425 billion to the GDP. 80 percent were small businesses
BASA's response to Committee's questions
The Portfolio Committee invited BASA to respond to the following:
The various funding facilities available to tourism small, medium and micro enterprises (SMMEs);
Qualifying criteria for various funding facilities;
Challenges experienced by tourism SMMEs in accessing available funding;
Assistance provided by the banks for SMMEs to meet the funding requirements;
Suggestions to improve tourism SMME funding; and
Any other relevant information
BASA's response was that the tourism sector had access to the same lending facilities as clients in other sectors. Its standard commercial products were overdrafts; commercial asset finance; term lending (lending for a specific term, longer than a year, to businesses); mortgage-backed business loans; commercial property finance; and government credit guarantees, such as the Khula Credit Guarantee from the Small Enterprise Finance Agency (SEFA). There was also the COVID-19 Loan Guarantee Scheme (LGS). Some banks had enterprise development programmes which provide co-funding and grants. Banks were deposit-taking institutions with a duty to extend credit in line with a multitude of risk mitigating regulations.
COVID-19 Loan Guarantee Scheme
Mr Mathe provided details of the COVID-19 LGS approvals. (See the pie graphs on page 14.)
He commented that overall, the performance had not met expectations. With the lending by turnover band, the largest share of loans went to companies with a turnover of more than R1 million, and less than R20 million. What was disappointing was the that the companies with a turnover of less than R1 million had a very small share of loans, which indicated that a more diversified set of funding sources was needed in South Africa for those companies, because some of them were not able to meet the criteria. Although the numbers were not as high as had been expected, the scheme had reached small businesses, as was intended.
He said there was no turnover cap for the Covid-19 Loan Guarantee Scheme. The maximum loan amount was R100 million. The business must have been in good standing as at end December 2019.
Repayments were required only after 13th month -- businesses were allowed to draw down the loan that was approved over six months, and they had an additional six months in which they did not pay back the loan itself; after that, they had to start repaying.
The banks had approved 14 827 loans to the value of R18.16 billion as at 27 March.
Standard lending criteria applied to all SMMEs, not just tourism businesses. These were:
• Affordability assessments;
• Business viability and sustainability;
• Sound financial and business management skills;
• Credit worthiness;
• Secured and unsecured credit appetite.
Mr Mathe added that part of the reason why BASA did not reach as many companies as was hoped for was that, because of the economic conditions, many businesses did not want to take on more debt. Such businesses were uncertain of what the future held. What would have been suitable to these businesses’ circumstances was different kinds of financial support, other than credit.
Funding challenges faced by tourism SMMEs
Businesses in the sector had experienced:
Reduced tourist activity, due to continued lockdowns;
Variants of the coronavirus negatively affecting international tourism;
Difficulty in preparing the relevant business documentation required by finance providers;
Lack of collateral and mitigants to solve the banking risk in funding;
Low awareness of funding opportunities available to SMMEs; and
Lack of access to markets affecting revenue and therefore profitability.
Lack of awareness
Mr Mathe said lack of awareness of funding opportunities exacerbated the problem of funding (McKinsey Report). The private and public sector should find ways to make individuals and businesses aware of different support measures available. A flash survey conducted with 100 SMEs in South Africa showed that 64% were receiving government loans/support, while 75% were making use of payment relief, such as the Unemployment Insurance Fund (UIF) and Pay as You Earn (PAYE). The top three reasons for not utilising the support available was because businesses thought they did not qualify, were not aware of it, or were aware but did not know where to find information.
This illustrated that BASA needed to get more information out to both the public and private sectors on what was available, so that businesses could take advantage of the opportunities. Its current awareness initiatives involved the financial education divisions of banks, together with BASA, running information campaigns on radio on different support measures on offer, such as payment holidays. The response BASA got in that area was that there was not sufficient information out there, so listeners of the various radio stations really appreciated this information.
BASA had collaborated with the South African Insurance Association (SAIA) to teach consumers through radio what long-term, short-term and credit life insurance for SMMEs entailed, as well as risk management for SMMEs and managing credit during the COVID-19 pandemic
Assistance provided by banks
Banks had administered:
The South African Future Trust, through which it had processed R1.04 billion, involving 9 656 SMME loans, to support 92 993 employees.
The COVID-19 Loan Guarantee Scheme, with the South African Reserve Bank (SARB) and National Treasury.
Payment holidays and moratoriums, which had seen R33.6 billion in payment relief from April to September 2020, and relief for 2.7 million individual credit agreements and 135 540 businesses.
Mr Mathe put forward the following suggestions to improve:
Stimulate local demand, focusing on local travel and safety.
Opening up of travel globally as the long-term booster of the tourism sector.
Government support was key to galvanising SMEs post COVID-19.
Government support could be in the form of relaxed levies, providing training and grants.
Synergy of government support initiatives through agencies like the Small Enterprise Finance Agency (SEFA), the Small Enterprise Development Agency (SEDA), which were sector-specific, was critical for impact.
Assessment and reform of laws impacting SMMEs (Output 5 of the National Integrated Small Enterprise Development (NISED) master plan).
Simplify funding application processes.
Business development support initiatives.
Corporates more generally could enable SMEs by focusing their supplier development for longer-term scale and competitiveness.
Mr Mathe added that BASA thought the assessment and reform of laws was important, because small businesses tended to carry a disproportionate burden of laws that were well-intentioned but were not supportive of their growth and development.
Among other suggestions for improvement, BASA felt that assistance to SMMEs should focus on:
Providing targeted and sector-specific support for SMEs now and post crisis;
Driving innovation, research and development;
Investing in the skills and capabilities that SMEs need at this time;
Boosting the national entrepreneurship ecosystem.
Tourism enterprises should also diversify their income streams by extending beyond the usual one product offering -- for example, by focusing not just on leisure travel, but also on business. They should also revisit their business models. For instance a stronger digital presence would be critical going forward.
Mr Mathe concluded by saying the Tourism Sector Recovery Plan recommended three strategic thrusts necessary to turn around the sector. These were re-igniting demand, rejuvenating supply, and strengthening the sector's enabling capability. These were underpinned by ten strategic recommendations with specific actions, timeframes and accountabilities. Recovery was critical for improved bankability of the tourism businesses.
The recovery of the tourism sector was linked to the government’s administration of the COVID-19 vaccine, as this would stimulate the demand that drives the sector.
Mr M De Freitas (DA) said that there was a need to educate small business owners on what their roles and obligations were, and what was required of them. There were so many good businesses that existed, but the business owners were not in a position to understand how banks worked, and how they could be beneficial to these businesses.
Mr P Moteka (EFF) asked questions on transformation. The Committee had set a tone of transformation, and that transformation went to the villages, townships and small dorpies (VTSDs). Was BASA aware of this goal that the PC wanted to achieve? If it was aware, what was it doing to make sure that it was happening? What was BASA bringing on board? In the villages in the coming five years, what was it planning to do to turn things around?
When the PC talked of the tourism recovery plan, it was more about the existing businesses -- that any existing businesses must not be closed, but supported instead. At the same time, the PC must make sure that the rural child and the village child was deriving benefits from the tourism industry. Each bank should tell the PC what they were planning to do for the village and township people over the next five years. There was more tourism infrastructure in the big cities, and the PC wanted such infrastructure in the VTSDs, so that the rural economy could grow, and South Africa did not have more people going to the cities and leaving their villages. Banks were recruiting people “all over” to get personal loans, and should use the same passion to take things to the rural areas and townships. At the next meeting, the individual banks must come with a plan. The PC would then know that the banks were moving in line with what it wanted to achieve. Transformation did not work as a slogan if one did not put plans and actions in place.
Ms M Gomba (ANC) asked about the approval of loans by the banks. She was concerned that those small businesses and people who were previously disadvantaged would not have the collateral that bank's required in order for them to receive a loan. What was the banks going to do, or were doing, to assist such small businesses that could not put up their properties as collateral, or who did not have many other things needed by the banks? Even if the business was viable, or the business plan looked lucrative, what was it that the banks could do to ensure those hiccups were addressed, so that people could get financial assistance from the banks?
Chairperson Mahumapelo asked about payment holidays, which were a consequence of the banks responding to COVID-19. What was the banks’ analysis, insofar as feedback was concerned, from the beneficiaries of that offer? In percentage terms, how many people in the tourism sector had opted for that facility, and in return, what had been the response in repayments? Were the majority of people who opted for that facility able to make repayments, and if not, what reasons had they given for not complying with the stipulated agreements in that particular option?
He asked about the actual profits of the banks. When the bank lent one money, there was interest that one needed to pay. The interest was linked to the anticipated profit that the banks would be making out of those particular transactions. He wanted to know whether all the offers that the banks had made as a consequence of COVID-19 had affected their returns. If so, what had been the extent, in percentage terms?
He wanted to suggest that the PC should agree with the banking sector that there should be an annual interaction of this nature -- a day be dedicated to deal with this particular matter, not just hours. This was because tourism was not an isolated variable in the broader economy. For instance, he would want the PC, in those interactions, to look at the entire value chain as far as the tourism sector was concerned. What this meant was that on that particular day, the PC could have representatives from the agricultural sector (who supply everything that people eat), from the transportation and aviation sector, from the security sector, from the arts sector and from sports. This would enable the PC to discuss the entire value chain, and how the banks were playing a role in each of those particular variables within the value chain. He suggested looking at that proposal, and if the banking sector agreed, to implement it on an annual basis so that all could see whether progress was being made.
Lastly, he said the performing arts were an important catalyst in the tourism sector. Tourists supported the arts, so if an artist was running an event, and if the bank was happy with the preparations for a successful event, could it come up with a source of funding, such as a quick loan? It would be the kind of loan where one would get money for the event, and by the Monday, when the event was over, one returned the money. It would be tailor-made for that particular event, and for the artists. Artists were an important catalyst in driving tourism. The banks may have some challenges in that regard with interest rates, because the profit motive of the banks was based on interest. However, he wanted to suggest that as part of the banking sector contributing to tourism, it might forego anticipated returns on such a loan. If they considered that the risk was close to zero, why not finance that artist for the weekend? That money would come back to the bank. It was a win-win for those who did not have the means to finance their events, and also a win from a branding credibility perspective for the banking sector. All would see that the banks, in addition to many other things that they were doing, were contributing to the upliftment of people in the arts. The arts were important in contributing to what people consumed as tourists.
Ms H Winkler (DA) wrote in the chat box that she had reception issues.
Mr H Gumbi (DA) said that he was covered by Mr De Freitas.
Ms P Mpushe (ANC) said that her questions had been covered, and she would await responses from the leadership of BASA.
Mr Mathe responded to Mr Sithole’s question on the awareness campaign, and said BASA was highlighting the campaign that it ran in the early days of the onset of COVID-19, when it had different support measures in place, such as payment holidays, debt restructuring and rescheduling, etc, to make sure that consumers and customers understood and could take advantage of them.
Regarding rural and township businesses, the campaigns that BASA was talking about in this meeting were not directed to tourism businesses -- it was trying to reach as many businesses and individuals that were affected by the pandemic as possible. It had decided to do this by using community radio, so that it could interact with people through a medium that they were familiar with. BASA had an ongoing consumer financial education programme, with each bank contributing to that programme in different ways. The aim was to try and create a customer base that was informed, was aware of what was available, and could make the right financial decisions. It did this on an annual basis. Part of this was prescribed in the financial sector code, which specified what BASA needed to spend on this initiative. It used different platforms for its ongoing consumer financial education -- social media, TV, and radio. Prior to COVID-19, it had used a lot of face-to-face interaction, where it would go to communities and give consumers financial education. In the COVID-19 era, it had had to look at other ways of reaching customers without having to go there physically because of the regulations. BASA could do better, and it would take the message from the Committee back to BASA members so they could see how they could improve on what they were doing.
He said there were many scammers. There was an organisation called the South African Bank Risk Information Centre (SABRIC), whose job was to look at all of this and come up with educational messages to customers on what to avoid, so that they did not get caught up in scams. SABRIC was an organisation created by banks jointly to try and fight cyber crime and banking crime. There were various other authorities which were looking at these things keenly. When banks became aware of scams, it reported them so that they could be closed down before they caused too much harm. BASA’s experience was that criminals tended to be quite nimble, and changed strategy all the time to try and scam people. What it could say -- and this was a function of good consumer education -- was that if it looked too good to be true, it probably was.
(Ms Winkler wrote in the chat box: Have there been any interventions for payment holidays for struggling business in tourism on vehicles and other assets?)
Mr De Freitas had raised questions about assistance to small businesses that had a very sound business case, but might not know how to go about it. Mr Mathe said that colleagues in the meeting may want to give specific examples of what could be done. A broad point to be raised, which was raised constantly in BASA’s engagements with the government, was that there was a recognised issue of there being a problem in the ecosystem that supports small businesses. There were gaps in the ecosystem. South Africa had a banking system that was recognised as being world-class in offering debt, but not all small businesses required debt. Other forms of support, such as business development and business services, which should be offered by different institutions, were not always readily available. Those services would be important in closing this gap of helping small businesses to get educated about what funding options were available, and how one could prepare to take advantage of them. This was something with which BASA constantly engaged, and it tried to play a role in creating a complete and more functional ecosystem to support small business. BASA was not there yet -- it was just one part of that ecosystem -- but with the facilitation of government, the other parts that were missing in that ecosystem could be built. BASA agreed with the sentiment expressed that it was an important thing to do. Sometimes they were approached by people who were just not ready to produce and present information that would make them qualify.
Mr Mathe responded to Mr Moteka’s questions, and said some BASA members may be aware of the goal of the PC. BASA was aware that the PC wanted to drive transformation in the sector, and make sure that there was support provided for small businesses. As far as possible, its engagements with government was to really see what role it could play in providing more and better targeted support. BASA would educate itself on the specific goals that the PC had set itself, and what role it could specifically play. It had produced and published a report last month on transformation in the banking industry. It was required in terms of the financial sector code to transform, and so targets had been set. BASA puts out a report every year on what it had achieved. It believed that transformation was important, and one element of that transformation was financing small businesses. It accounted for how it had performed in relation to that. The report was available on BASA’s website, and it would be happy to present it to the PC if it was interested. The report covered all areas of transformation, not just the tourism sector.
Ms Gomba had asked about the approval of applications from disadvantaged communities. This was an example of the missing parts of the small business sector ecosystem. In other jurisdictions, there were systems in place, for instance, for looking at the use of movable assets as part of surety or collateral. There was a lot of work that needed to be done there. However, for that to be a recognised form of collateral, one also needed to have a proper system of how that got registered, etc. These were debates and conversations that were going on in the small business support world, when looking at how best to provide support and overcome the challenges which tend to leave people unsupported.
Mr Mathe complimented Chairperson Mahumapelo on his comments, and said that he understood the world of banking very well. With regard to the payment holidays, BASA had not done a sectoral analysis of how many of the businesses that took up the offer were from the tourism sector. This was a short-term measure that was meant to help businesses and individuals during the hard lockdown and the higher alert levels when there was no economic activity. What had started to happen was that as the economy started to open up, borrowers had started to service their credit agreements. There had been an improvement. Many banks had reported major reductions in earnings last year as a result of COVID-19. Money that banks would have collected immediately under normal circumstances had had to be rescheduled so that it was collected later, as a consequence of payment holidays. The reports last year of a reduction in earnings were “staggering” -- just about all banks had upwards of a 40% reduction in earnings. BASA thought that things would improve. It did not have the numbers that banks reported individually, but Members would have heard about the advisory from Standard Bank on things looking up. The impact of COVID-19 was there, but Mr Mathe thought that this year would look a lot better than last year considering the extraordinary measures that had had to be taken in response to COVID-19.
BASA would welcome an engagement annually with the Committee, because banking exists as a service to society, and as a service to this economy. BASA would want to be there to hear from the Members of Parliament and other sectors of society so that it could be of better service. It would definitely take up that offer if it became available.
The suggestions around the performing arts and having products that met the particular needs of the sector was not something that Mr Mathe had looked into. However, this was innovative, and Mr Mathe was quite certain that his colleagues would take those ideas back to their product development teams to see what could be done about it. He could not say in the meeting whether it was something that would be feasible or not, but it was certainly innovative.
The Acting Chairperson thanked the BASA delegation for a meaningful engagement. She said that Members would study the content given by BASA, and take it back to their constituencies. Members were able to reflect and see where there were policy gaps, where there were legislation gaps, where the PC could intervene, and how best it could strengthen the sector. Members could also look at what could be done where there was excessive red tape, or there were stringent measures that did not allow for easy entrance for SMMEs into accessing much-needed loans and resources to grow their businesses. It was now up to Members of Parliament to sit down and see where there were policy gaps, legislation gaps, and red tape. How best could Members put their heads together, and ensure that they minimised this so that people could access resources?
She thanked the banking sector for the engagement, and hoped that this was not the last engagement with the sector.
The Acting Chairperson welcomed Members from other committees among those present -- Mr F Jacobs (ANC), from the PC on Small Business Development, and a Member from the North West province on the NCOP's Select Committee on Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour. She had not been able to see who had been present as she was acknowledging Members, so it was not an omission -- it was just that she could not be alerted that those Members were on the platform.
Mr Mathe said that a BASA member wanted to comment.
Mr Jesse Weinberg, Head: SME Customer Segment, First National Bank (FNB), said BASA was lucky to have a great collective of people around the table. He wanted to make a comment specifically regarding what more banks were doing regarding transformation, SMME education, and helping the tourism industry from a developmental perspective.
Banks were, more than ever, in aggressive competition with each other. Many of the banks had had significant losses due to COVID-19, with significant write-downs on lending, and banks’ share prices going into free-fall, which had all sorts of implications. What it did mean was that with this increased competition between banks, there was an additional drive to provide more than just being a bank. This extended into the value propositions which banks were continuously looking to offer the market, and to offer South Africa. This was a good thing for the country and the tourism sector, because it meant that in order to win customers to choose FNB as their bank, for example, the customer needed to feel that they were getting value, because they had choices.
In the last few years, all the banks had done well in providing business education, developmental hubs, and enterprise and supplier development programmes. There had been a notable shift away from seeing development of SMMEs as just a tick box exercise, to something that needed to be done in order to grow SMMEs and the businesses of the future, so that banks would actually have clients in the future. Mr Weinberg thought it was very encouraging from what was seen from all the BASA members that significant amounts of funds had been invested into developmental education programmes, awareness programmes, access to markets, and facilitating connections between businesses.
Something that FNB was proud of was that it had launched a mass-scale, free electronic education programme, which was available on the FNB app for free. It was called Fundaba, and it allowed businesses, in five different languages, to access educational material. This, along with things that other banks had done, had started to spur a great amount of activity, and encouraged competition between the banks to see who could do more to help the country and help SMMEs, which also meant helping SMMEs in the tourism industry.
FNB was entering a stage where although it was constrained in some senses of what a bank could actually do, it could lend by law only to customers who could repay the loan, so it recognised that there were other ways that it could try and help businesses. A loan was not the answer to all of the problems. Loans were governed, legislated, and strictly adhered to in order to ensure that FNB protected SMMEs and individuals from going into further indebtedness and putting them in a situation where they were in further financial trouble. Apart from loans, it had been highlighted that banks could collaborate more with government. The sector was constantly talking about how it wanted to extend the invitation to government to see how the parties could further collaborate, for example, on things that were beyond the banks’ control. Perhaps banks could only lend in certain places, and maybe they could collaborate with the government to see how banks could help to increase revenue for those businesses if there were obstacles in their way. It was a two-way partnership for banks, because there were certain things that banks could do that government could not do, and things that government could do that banks could not do. It was on that basis that a lot of the difficult answers could be dealt with collectively.
Sometimes there was a labeling of banks as not doing enough, and that they were not in touch with some of the imperatives of the country. Sometimes those comments were unfair -- just speaking from a place of listening to the amount of energy, dedication, discussions, initiatives and funding that were done by the banks, where it was absolutely their top priority to not just be part of, but to try and fast-track the imperatives of the nation, of SMMEs, and all of the things that needed to happen to make the country a better place. There were incredibly driven and intelligent people behind the scenes to try to make everything work. There needed to be even more collaboration with the government on things that were beyond the banks’ control, such as the global pandemic which had restricted international travel, and even provincial travel at times. Banks and the government could combine their collective resources and thinking, and solutions could be more powerful than if it was just left up to the private sector. There was lots of excitement around future collaboration. This was not seen as a once-off exercise -- there were continuous things happening to help the tourism sector.
The Acting Chairperson noted that there were outstanding issues and matters to take care of. However there would be a sitting at 11:00, which would be an extended public committee (EPC) meeting. She asked the Committee Secretary to advise if there was enough time for those items, or if they should be moved to the next meeting.
The Committee Secretary said that the next item on the agenda was for the Committee to indicate if it agreed with the draft minutes of 11 May 2021. On that day, the Committee had been adopting the budget vote of the Committee, and was also in preparation for the debate on 18 May.
An additional matter raised before the Committee was that there was a proposal of a trip for an oversight visit to Limpopo. That had been deferred to August. Parliament was urging committees to complete their business on 4 June. The constituency period then commenced on 7 June. The Secretariat was aware that there was a proposal that would be taken by the National Assembly Programme Committee to the Joint Programme Committee, that 17 August to 3 September be allocated to committees of the National Assembly.
If there was enough money, the Secretariat would suggest to the Committee that when it did oversight visits, it should visit two provinces -- Limpopo and one other. The Committee may look at 17 August to 21 August for the Limpopo visit. For the second province, it may look at 30 August to 3 September. Those proposals were subject to whether they were approved by the Joint Programme Committee, which will sit on Thursday, 3 June.
Consideration of minutes
Ms Gomba moved the adoption of the minutes of 11 May 2021.
Ms Mpushe seconded the adoption.
The Acting Chairperson said that Mr Boltina had taken the Committee through the amendments to the programme. The Committee would then await the meeting of the Programme Committee.
The Acting Chairperson thanked the Members for their engagement. She reminded them that there was a sitting at 11:00 and a sitting of the National Assembly at 14:00. She encouraged them to log in to both meetings.
The meeting was adjourned.
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