SA finance sector reaches out

15 August 2006

South Africa’s Financial Sector Charter has created a strong sense of ownership on the part of private institutions which are extending financial services to low-income groups in the country, says Finance Minister Trevor Manuel.

Speaking on Monday at the launch of Australian bank Macquarie’s partnership with local bank First South, Manuel said invaluable lessons had been learned from the Financial Sector Charter process.

“Firstly, through being a voluntary initiative, in many ways driven by the private sector, the Financial Sector Charter has created an incredible sense of ownership and accountability.

“Secondly, the architects of the Financial Sector Charter have been vigilant in terms of crafting a framework that is as broad-based as possible.

“The Financial Sector Charter has also been unlike any other charter in that it carves out an explicit development role in the economy for the financial sector,” Manuel said.

Reaching out
Not only did the charter commit tens of billions of rands to targeted investment in support of small and medium enterprises, low-income housing, resource-poor farmers and developmental infrastructure; it also set out explicit targets for ensuring that the sector broadened its reach by providing affordable and appropriate access to banking, insurance and savings products.

Manuel highlighted the Mzansi bank account as a front-runner in this regard.

“With over 3.3-million accounts opened since its inception in October 2004, the Mzansi account has silenced the sceptics who thought it not possible to sustainably service the low-income sector of the population.”

The government has embarked on a number of initiatives, on its own and in partnership with financial institutions, to increase access to banking and savings services by low-income and other marginalised groups.

Giving credit where it’s due
The SA Micro Finance Apex Fund, launched by Trade and Industry Minister Mandisi Mphahlwa in 2005, extends micro-credit of up to R10 000 to entrepreneurs excluded from large financial institutions. The government will capitalise the fund by up to R120-million yearly.

And the Micro Agricultural Finance Scheme of South Africa, administrated by the Land Bank on behalf of the Department of Agriculture, extends micro credit, savings, insurance and payment facilities to economically active poor rural households, small farmers and agri-businesses. The scheme provides loans of up to R100 000, payable over 12 months.

Manuel said South Africa’s financial institutions had collectively committed themselves to provide R25-billion worth of funding for transformational infrastructure by the end of 2008.

“The Financial Sector Charter recognises the need for the financial sector to dedicate funding to infrastructure projects in underdeveloped areas where communities have historically been denied equitable access to economic resources,” he said.

Public-private partnerships
With estimates for infrastructure spending over the next three years exceeding R370-billion, Manuel said the government had to look increasingly to public-private partnerships as a means of meeting its delivery targets.

Thirteen public-private partnerships (PPPs) had been implemented to date under the auspices of the National Treasury’s PPP unit, while a further 48 PPP projects were registered with the unit as being in either feasibility study or procurement stage.

The minister said the projected private investment in PPP projects in the country over the next three years was R13.8-billion.

“We will continue to drive empowerment in every facet of PPPs because we know that these projects hold huge potential to grow new black businesses – both big and small – and to develop black management and skills,” Manuel said.

Source: BuaNews