Revitalising economic growth and inclusion through the real transformation of the banking sector

Over the years South Africa has earned global recognition for its robust financial infrastructure systems and institutions that it has built with the vision of building a democratic country. This vision has been brought to life through the deliberate frameworks of black economic empowerment in an effort to extend the participation of historically excluded individuals and communities into the economy.

The International Women’s Forum South Africa (IWFSA), WDB Investment Holdings (WDBIH), the Johannesburg Securities Exchange (JSE) and The Association of Black Securities and Investment Professionals (ABSIP) jointly convened a critical dialogue with leaders from across the South African banking sector on the topical issue of the transformation in the banking sector, and how institutions, corporations and individuals can be galvanized to accelerate and sustain progress made so far, to ensure that the desired change and inclusive economic growth in South Africa is achieved.

“There is an African saying that saying that When the rhythm of the music changes, the dance steps must change also! Currently the rhythm of the dance is not in sync with the music. We know that the financial services sector plays a central role in the promotion of economic growth, job creation and prosperity for our country and its citizens over the past 26 years”, says President of the International Women’s Forum South Africa Irene Charnley. “We've witnessed evidence of progress being made in the development of more solid systems and processes that promote good corporate governance, however, there are growing concerns that the culture of transformation has not been consistent with the goal of transformation and economic inclusion. Whilst steady progress to transform the financial services sector has been made, the consensus is that it has not been enough”.

In reviewing the BBBEE scorecard and the story we see unfolding, it clearly reflects that the South African financial services sector is untransformed in 2021 and more needs to be done to deepen and broaden transformation. The COVID-19 pandemic and the recent social unrest experienced just over a month ago laid bare the deep unsustainable inequalities along racial and gender lines in South Africa. It also sent a clear message that real change and impact for all South Africans, especially those that continue to experience marginalisation and exclusion, is needed now more than ever to ensure that we can enjoy the fruits of our democracy.

“Everyone, including the financial services sector, must again come up with creative solutions in providing finance and other assistance to businesses that have been decimated by COVID-19. We know that these businesses are mainly SMME’s and township and rural economy businesses that also tend to employ predominantly black women and the youth”, says the Association of Black Securities and Investment Professionals (ABSIP) President Polo Leteka Radebe.

A 2020 transformation report published by the Banking Association of South Africa (BASA) showed that black ownership had declined in the banking industry over a three-year period across all measures including black voting rights and particularly, black women’s voting rights. The report, compiled with data supplied by member banks also reported that financing of black-owned SMEs had increased from 13 to 28-billion. What would be interesting to know is how much of the financing was directed to women-owned businesses.

Radebe notes that, “A key challenge is that the South African financial services sector remains largely untransformed. Women make up 51% of the country’s population, however they continue to be under-represented in decision-making positions across the economy. If we are to achieve real economic inclusion of women, it is important to ensure that representation reflects the demographics of South Africa and that women are empowered with the tools they need to be successful”.

There is a need for the sustained transformation of the banking sector as one of the biggest employers in the private sector. There is an opportunity to substantially build on the good progress made by the banks with respect to black directorship and representation across some levels of management. However, transformation is not just about numbers. The issue of inclusion is important and topical too, especially given the recent resignations of black chief executives in certain financial services institutions.

The seats we occupy in these institutions need to be utilised to change the narrative and in turn, the culture to one that enables and encourages us as professionals to make a change to the status quo. One of the key challenges is that most of us lack the courage to challenge the status quo, in the interest of "assimilation". It is time for this to change.

The appointment of black and female leaders into the C-suite and higher echelons of the sector has regressed to numbers fewer than desired. Given the crucial role that the financial sector plays in the country’s economy, economic growth and transformation within the sector is not just a topical issue, but it requires a more deliberate and concerted effort.

“We should leverage our current crisis and look at the fact that our economy is currently shrinking as an opportunity to be innovative in the way we drive inclusive growth. Credit to businesses should come with stringent transformation targets that will force corporates to transform, whilst helping banks with transformation and impact,” says Radebe.

Supporting women to play a significant role in the ownership of the economy is vital and well-considered interventions in this regard will help to reach the milestones set in the Financial Sector Charter and the Department of Trade and Industry’s ‘codes of good practice’ with respect to the adequate representation of women at top levels of influence in decision-making and growth in South Africa’s economy.

“Transformation starts and ends with leadership, and as such regulation has a key role to play to enact change. The Financial Services Charter (FSC) has taken us up to a level and we now need to talk about proper transformation,” notes Charnley.