Nene: African Bank an exampleComment on this story
Johannesburg - African Bank being placed under curatorship was an example of how the Treasury had strengthened its financial sector oversight, Finance Minister Nhlanhla Nene said on Monday.
“The events that culminated in curatorship of African Bank are a powerful reminder of the urgency of this work,” he said.
“National Treasury had already, in 2012, begun the process of further strengthening financial sector oversight.”
On Sunday, SA Reserve Bank governor Gill Marcus announced African Bank had been placed under curatorship.
In a six-month period to March 2014, African Bank posted a headline loss of R3.1 billion.
In a speech prepared for delivery at the 17th Southern African Internal Audit Conference in Johannesburg, Nene said no financial sector regulatory regime could prevent the failure of all financial institutions.
“Effective policy includes the resolution of financial firms in trouble in a way that imposes losses on those investors who profited from that firm’s activities and who were in a position to exercise influence over that firm’s management,” he said.
“In this regard, the role auditors play in providing transparency to financial markets is vital.”
Nene said key problems for economic growth were largely domestic.
Supply-side disruptions had plagued the domestic economy over the last couple of years, which had weakened confidence and reduced the level of investment and household consumption.
“Private investment grew by only one percent in first quarter of 2014, while private household consumption recorded modest growth of 1.8 per cent,” he said.
“The growth of the South African economy is not sufficient to address our challenges of poverty, inequality and unemployment.”
The most recent Quarterly Labour Force Survey showed South Africa's unemployment rate had climbed to 25.5 percent.
“Private sector employment is still not picking up, with public sector employment supporting the labour market,” the minister said.
“With the labour force expanding and over 40 percent of the working age population not participating in the labour market, structural unemployment remains a persistent challenge for South Africa's long term growth and employment prospects.”
Government was working hard to improve business conditions, and recognised that this required not only releasing current supply side constraints, but also improving policy alignment and certainty. - Sapa