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Johanesburg - South Africa was fortunate it did not have to call on its taxpayers to save its banks during the recent financial crisis, Deputy Minister of Finance Nhlanhla Nene said on Tuesday.
He was speaking at the Banking Association of SA's inaugural summit in Johannesburg.
"SA was prudent during times of plenty so government was able to stimulate the economy in a sustainable way."
Nene said the recession hit South Africa when the country was preparing for the World Cup and building special infrastructure in addition to its normal infrastructure build programme.
"Together with our countercyclical fiscal policy, this helped us during those trying months.
"The infrastructure projects provided us with a much-needed cushion during the global downturn, and will help us emerge as a stronger and more competitive economy."
Nene said that when the 2010/11 budget was tabled in February, it was projected that the fiscal deficit would be 6.2% for the year, "a substantial change from the 1.7% surplus we had in 2007/08".
Nene said this had given the economy much needed support during "very difficult global conditions," and assisted in reducing the negative impact of the global recession on South Africa's people.
Nene told the summit that the country's banking industry faced challenges of its own.
"One of these is to reconcile the South African first world banking sector, characterised by exceptional infrastructure and
technology, with the enormous demand for financial services."
Inheriting a highly-concentrated financial sector, and financial service providers with little incentive to reduce the cost of
banking services or spur innovation, the government had to act to improve access to the banking system for all South Africans.
"Our desire to broaden access to banking was not only motivated by pure altruism."
Nene said extending banking to all South Africa's people ensured that the allocation of capital and the developmental needs of the country were adequately matched; and ensured that the benefits of economic growth accrued to all.
"In trying to bridge the divide between the First and the Second economy, government also undertook to address South Africa's unique dilemmas."
Financial inclusion, a common thread in all policy areas, was a priority as far as providing access at reasonable costs for a wide
range of financial needs and within sound and sustainable institutions.
Nene said the government recognised that including people in the formal system brought growth to communities with the commensurate consumer protection.
"We recognise the financial sector as an important tool in bridging the divide and as part of the reform programme to assist
on the challenges of development and poverty alleviation."
An integral part of addressing these challenges was providing appropriate savings, risk and transactional products, through
technology and innovation.
Nene said the Financial Sector Charter, launched in November 2003, was a milestone in achieving this objective and in the
transformation of the financial sector.
"It demonstrated the possibility of a sustainable partnership between government and industry by embodying an agreement among the major financial institutions on a set of service provision and empowerment targets."
One of the key initiatives flowing from the Charter process was the innovative Mzansi account, a low cost national bank account, launched in October 2004," Nene said.
He was speaking at the Banking Association of SA's inaugural summit in Johannesburg.
"SA was prudent during times of plenty so government was able to stimulate the economy in a sustainable way."
Nene said the recession hit South Africa when the country was preparing for the World Cup and building special infrastructure in addition to its normal infrastructure build programme.
"Together with our countercyclical fiscal policy, this helped us during those trying months.
"The infrastructure projects provided us with a much-needed cushion during the global downturn, and will help us emerge as a stronger and more competitive economy."
Nene said that when the 2010/11 budget was tabled in February, it was projected that the fiscal deficit would be 6.2% for the year, "a substantial change from the 1.7% surplus we had in 2007/08".
Nene said this had given the economy much needed support during "very difficult global conditions," and assisted in reducing the negative impact of the global recession on South Africa's people.
Nene told the summit that the country's banking industry faced challenges of its own.
"One of these is to reconcile the South African first world banking sector, characterised by exceptional infrastructure and
technology, with the enormous demand for financial services."
Inheriting a highly-concentrated financial sector, and financial service providers with little incentive to reduce the cost of
banking services or spur innovation, the government had to act to improve access to the banking system for all South Africans.
"Our desire to broaden access to banking was not only motivated by pure altruism."
Nene said extending banking to all South Africa's people ensured that the allocation of capital and the developmental needs of the country were adequately matched; and ensured that the benefits of economic growth accrued to all.
"In trying to bridge the divide between the First and the Second economy, government also undertook to address South Africa's unique dilemmas."
Financial inclusion, a common thread in all policy areas, was a priority as far as providing access at reasonable costs for a wide
range of financial needs and within sound and sustainable institutions.
Nene said the government recognised that including people in the formal system brought growth to communities with the commensurate consumer protection.
"We recognise the financial sector as an important tool in bridging the divide and as part of the reform programme to assist
on the challenges of development and poverty alleviation."
An integral part of addressing these challenges was providing appropriate savings, risk and transactional products, through
technology and innovation.
Nene said the Financial Sector Charter, launched in November 2003, was a milestone in achieving this objective and in the
transformation of the financial sector.
"It demonstrated the possibility of a sustainable partnership between government and industry by embodying an agreement among the major financial institutions on a set of service provision and empowerment targets."
One of the key initiatives flowing from the Charter process was the innovative Mzansi account, a low cost national bank account, launched in October 2004," Nene said.
