ADDRESS TO THE PORTFOLIO COMMITTEE ON FINANCE
NATIONAL ASSEMBLY

DR BLADE NZIMANDE,
ON BEHALF OF THE COMMUNITY CONSTITUENCY,
NEDLAC

CHAIRPERSON,
HONOURABLE MEMBERS
GUESTS

Thank you for the invitation to address and make this submission to your committee on behalf of the Community Constituency of Nedlac. I am the chairperson of the Financial Sector Campaign Coalition, one of the six sectors registered in the Community Constituency.

Since I left parliament in 1999, I do not often get the opportunity to sit in these committee rooms and chambers and engage with former colleagues and comrades. I really appreciate this opportunity to reconnect around a matter that is of fundamental importance to millions of South Africans, especially the workers and the poor. I had hoped that addressing the committee on the second anniversary of the Nedlac Financial Sector Summit agreements, which were signed on 20 August 2002, this would be an occasion for celebration; a marking of the progress we had made in implementing the much needed changes envisaged in the package of Summit agreements.

Sadly, that is not the case.

I am saddened at the report I must make on behalf of the community constituency. At the same time, the community constituency is angry that, fully two years after the historic signing of the Summit declaration, there is little to be proud of in reporting implementation of the Summit agreements.

And, along with millions of South Africans, we are angry that the financial sector has consistently thwarted efforts to implement the Summit agreements in an open, inclusive and transparent manner as required by the Summit itself, to which all the parties committed themselves.

As the FSCC and the community constituency, we have put considerable effort and energy into ensuring that the implementation of these agreements is discussed and agreed by all the parties involved.

When this campaign started, led by SACP, its rallying cry was: "Make the banks serve the people!" That simple slogan articulated the feeling of millions of South Africans whose interests had never been served by the banks, the insurance companies or other financial institutions. It expressed the frustrations of those for whom the "net blankes" signs of our apartheid past had been replaced with the invisible, but no less exclusionary, signs of South Africa's financial institutions during the first decade of democracy - signs that said in no uncertain terms "Net ryk mense"; "No workers, no poor".

Members will be familiar with the recent report on competition in banking, commissioned by the National Treasury and the Reserve Bank. That report showed that South African banks operate a complex monopoly to keep charges high and serve only an elite minority. The report came as no surprise to the FSCC or the rest of the community constituency at Nedlac. It was a clear vindication of our campaign calling on banks to serve the people.

As we celebrate 10 years of democracy, this constituency, representing the majority of South Africans, cannot report much, if any, progress in extending financial services to improve their lives.

What has happened since 2002?

The Community Constituency thought we had made progress in 2002 with the signing of the Nedlac Financial Sector Summit agreements. To remind honourable members the Summit signed 13 agreements. They were signed as a package, not as isolated agreements, aimed at fundamentally transforming the financial sector to serve millions of South Africans historically ignored by the sector, particularly millions of black workers and the poor.

To remind honourable members, the stated goals of the Summit were:

Specific agreements included the following:

What has government done?

We wish to note with satisfaction that since this agreement, government has embarked

on significant measures towards fulfilling its side of the bargain.

These include:

The Financial Industry

The response of the financial industry so far has been extremely disappointing!

After the signing of the Summit agreement, the financial industry went off on its own to draft a financial sector charter to give effect to these agreements. The drafting of the Charter was done behind closed doors by business alone with limited involvement by government but to the total exclusion of the other two Summit agreement partners, community and labour. We expressed concern about this, but when the Charter was published in October last year, we decided not to be obstructive, despite having been excluded, and we welcomed it as a first step, a step forward.

We noted some positive elements in the Charter, including:

But the Charter has severe shortcomings:

But developments since the launch of the Charter in October 2003 are even more disturbing than the faults in the drafting process or the document itself.

Since the signing of the Summit agreement in 2002, the financial industry has concluded BEE equity transactions of an estimated R15 billion without spending a cent on anything that addresses the interests of the workers and the poor! Not a cent for low-cost housing, not a cent for SMMEs, not a cent to support financial co-operatives and burial societies!

It is clear that the industry's priority is with enriching a few. Their BEE deals clearly benefit a tiny minority of an elite. We call upon this Committee and Parliament to take a very serious look into this matter.

We have two farther concerns in this regard:

And we are also concerned that the industry continues to meet behind closed doors to decide how to allocate the Charter's R75billion. This is a matter of serious concern to us, because we have a number of proposals regarding the allocation of the R75 billion (or possibly more). To give a few examples:

We are concerned that the financial sector is avoiding discussion with social partners. Their handling of the national bank account to address our demands and the Summit agreement on universal access is a classic example of this attitude. Instead, they seem to want to engage government separately and exclusively to the total exclusion of the community and labour constituencies.

This brings us to the way forward.

One of the key obstacles to taking forward the Charter process is the composition of the charter Council. In terms of the Charter itself, the Council is supposed to be 50% industry representatives and 50% all other interests. However, the industry is now making a ridiculous suggestion that the Council be 80% industry representatives. The community and labour constituencies want the Charter Council to be constituted along the lines of the Nedlac model, with equal representation by all parties and decision-making by consensus.

We are calling for the finalisation of the composition of the Charter Council as a matter of urgency with equitable representation for community and labour constituencies, so that we finalise the Charter targets in an inclusive, rather than a secretive and exclusive, manner. We also want immediate agreement on a package of financial services to meet the needs of workers and the poor. We have had big deals for a few, now we want a people's deal on low cost housing, universal access, HIV/Aids, investment in infrastructure to address the legacy of apartheid, support for small, medium and micro-enterprises, financial and other co-operative.

We urge this Committee and Parliament to reflect on these matters and support truly broad- based Black Economic Empowerment and a package of deals for the poor. We also hope that honourable members will understand why we are going back to the streets with rolling mass action in support of our demands for the implementation of the whole package of Summit agreements and a people's deal; an end to elite boardroom processes and immediate finalisation of the Charter Council. From this Committee hearing, we will be holding demonstrations in front of banks and other financial institutions in Cape Town city center.

I thank you.