29 August 2012
Promoting South Africa as a financial centre and investment “gateway” for the continent is imperative if the country is to benefit fully from the growing global investor interest in Africa, according to the National Treasury and the country’s banks.
This was one of the things that emerged from Monday’s meeting in Pretoria between Finance Minister Pravin Gordhan and the chairpersons and CEOs of the major banks.
In a statement issued after the meeting, the Treasury said “the substantial global increase in interest in Africa was noted, as well as the fact that South Africa was well placed to benefit from this.
“If South Africa is to benefit fully from this interest in sub-Saharan Africa, government and the private sector must work together closely.”
The meeting noted that despite the ongoing European and global financial crisis, South Africa’s banks remained well-capitalized, liquid and solvent. Lending conditions had in fact improved, with credit extension beginning to rise, and the latest banking results pointing to a recovery in banks’ profitability.
“In particular, the representatives of banks confirmed the build-up of corporate cash balances and noted that this was a global phenomenon, which was typical of global uncertainty and a lack of investor confidence.
“This provided opportunities going forward to unlock money for investment in emerging economies.”
The banks indicated their strong support for the government’s vision of growth that supported job creation and poverty reduction, and in particular for the state-led infrastructure drive announced by President Jacob Zuma in February.
The banks “noted that they could play in key role in both the financing of the key infrastructure projects as well assist in providing the technical capacity to speed up the delivery of such infrastructure,” the Treasury said.
“Constraints to a smoother working relationship between the financial sector and government were identified, and the meeting agreed that the Minister of Finance will coordinate attempts within government to remove these blockages.”
The meeting also discussed the international regulatory requirements for banks.
“Progress in meeting Basel 3 requirements was noted, and the announcement of measures to assist banks to meet the liquidity coverage ratio was welcomed.”
The banks had also noted “the ongoing efforts of the National Treasury and the Financial Services Board to ensure South Africa’s compliance with the G20 requirements for clearing and reporting of derivative transactions”.