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Financial sector slammed for slow pace of transformation

Financial Sector Transformation Council (FSTC) chair Solly Mapaila. File picture: Motshwari Mofokeng African News Agency (ANA)

Financial Sector Transformation Council (FSTC) chair Solly Mapaila. File picture: Motshwari Mofokeng African News Agency (ANA)

Published May 11, 2022

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Cape Town - Solly Mapaila has warned that the financial sector is lagging behind in the transformation agenda and has failed to transform over the last two decades.

Mapaila, who chairs the Financial Sector Transformation Council (FSTC), said in a report for 2018-2020 financial years, the council has found that the sector has not met the key targets that had been set to transform.

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He said it was a problem that there has been a lack of transformation, with the country facing an increase in unemployment.

“Unfortunately, the recent experience of the FSTC indicates that the key government institution responsible for the regulation and oversight of the Financial Sector at large – the National Treasury – has exhibited a limited interest in engaging in matters relating to the transformation of the sector and has largely contributed, albeit unwittingly, to the lethargic posture the sector has adopted towards necessary changes,” said Mapaila.

He said, for the sector to meet the required targets, it would need to do certain things – including developing legally binding measures to enforce transformation and the transformation scorecards must be measured against socio-economic challenges.

The report also found there has been regression in some of the areas and this required urgent change.

“It is evident that while the financial sector continues to evolve with the implementation of transformative measures, the economic challenges remain largely unchanged, and require a renewed consciousness and commitment towards a transformed and inclusive economy. Although the report is indicative of slight improvement when comparing the performance of the previous measurement periods, emphasis should be placed on adopting progressive mechanisms that do not only prioritise the achievement of the prescribed targets, but also promote moving beyond the scorecard,” said the report.

Trade union federation Cosatu has continuously called for the financial sector to be regulated more closely, with its spokesperson Sizwe Pamla recently saying that President Cyril Ramaphosa’s administration betrayed public servants.

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Following the release of the FSTC report, Pamla told IOL that Cosatu was not shocked by its findings and called for the Reserve Bank “to be taken back to the people where it belongs”.

“The sixth administration is the best government that the private sector could have bought. This government grants the private sector everything it demands,” Pamla said.

He claimed that there were “cartels” running the banking sector to such an extent that new banks had their licences denied.

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“The financial sector is monopolised. They bully the Reserve Bank into submission.

“The banks we have now are not only sitting comfortably and accepting the fact that they are anti-transformation, but they are so emboldened to speak out against transformation,” he said.

Pamla said that Cosatu was of the view that the current government was not interested in transformation, as it was not popular with its commercial needs.

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“We believe that Parliament should hold the Reserve Bank accountable. The fact that this responsibility is still with National Treasury is a problem,” he added.

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