ANCYL slates SA's banks

Johannesburg - The financial sector was not helping the country's black majority, ANC Youth League (ANCYL) spokesperson Floyd Shivambu said on Thursday.

He was addressing a conference of the Association for Black Securities and Investment Professionals (ABSIP) in Sandton.

"Banks are creating an indebted middle class," Shivambu said, adding that while members of this group were driving luxury vehicles, they owed a lot of money to the banks.

"They own nothing but they owe."
 
Shivambu criticised SA's banks for not funding developmental research or industrial development.
 
He said that the Industrial Development Corporation (IDC), Land Bank and Development Bank of SA were "useless".

However, this uselessness must not necessarily be blamed on the state.
 
"Lazy thinkers always attribute inefficiency to state ownership," Shivambu said.
 
Shivambu said the ANCYL advocated the creation of a state bank.
 
"All public accounts would be shifted to the state bank and the IDC would be linked to it as well."
 
Shivambu said the state bank would then invest heavily in new incentives that would beneficiate and industrialise SA's resources.

"The bank must also finance import substitution - our cellphones, fridges, TVs - how many of them are manufactured here? We need to look into this."

'People need to be held accountable'

In response to the ANCYL's remarks, Cas Coovadia,  Managing Director of the South African Banking Association said on Thursday that banks did not “deliberately put people into debt that they can't manage - that would be a self-defeating exercise.”

Instead of a state bank, Coovadia added that he would prefer to see greater leverage of the Postbank.

“Postbank has the ability to reach markets and people which commercial banks don't have ... it represents an opportunity to leverage off each other's strength.”

He explained that commercial banks could begin to play a greater role by constantly talking to the government about critical factors for economic development.

Coovadia said that the South African Banking Association would soon be ready to launch a debt restructuring program, which would restructure the debt of people who were struggling with repayments..

In that process the banks would take some pain, “but people also need to be held accountable for irresponsible borrowing.”

“We're trying to regulate the problem of debt without necessarily going for massive repossession,” he added.

“In South Africa, we're uniquely challenged in that we apply first-world, cutting-edge regulations to a third-world country.”

Transformation

On the issue of transformation, Coovadia said that it needed to be repositioned from being a “black issue” to being one of national importance for the financial sector.

“A common vision on transformation outcomes is critical,” he noted.

Coovadia's calls for more dialogue and introspection were reinforced by Leon Campher, the CEO of the Association for Savings and Investment South Africa.

Campher spoke about the need for “capitalism with a conscience,” and the development of a system which allowed for the sustainability of the financial sector and the country in which it operated.