Publication Date: 07/06/2018

Annual General Meeting

2017 was a tale of two halves for the Banking Association of South Africa (BASA) and the industry it represents.
The year was marked by rapid legislative change, muted economic growth and political uncertainty. In this challenging environment we continued to work tirelessly with all other social partners to find solutions to reinvigorate growth whilst simultaneously increasing our calls for a return to good governance and an eradication of corruption, patronage and state capture.
In April last year we agreed a set of objectives which would drive our work as an industry association. These were:

  • First, engaging relevant stakeholders to build alliances and further industry objectives
  • Second, to develop an agenda for the banking sector to play a bigger role in broader socio-economic issues
  • Third, to play a shaping role in legislation and regulatory developments
  • Finally, to restructure the association and improve its capacity and capability to ensure it can deliver on its advocacy and policy work.

1. Engaging stakeholders and building an alliance to further industry objectives
In 2017 we worked more proactively with a broad spectrum of stakeholders and in close collaboration with other business organisations like BLSA and BUSA. We did this to amplify our voice as well as to leverage existing resources and networks.
We also played an important role in the CEO Initiative and supported the establishment of the R1.4bn SME Fund.
BASA was invited to participate in a number of high-profile forums to discuss issues that are critical to our collective future – I believe this is testimony to the important role we have to play as an association and our contribution to the public debate.
We played an active role in a number of forums during the year in review. These include: the fees commission, the parliamentary hearings into the transformation of the financial sector and more recently in various panel discussions on the land question.
Given its importance for the long-term sustainability of the industry and indeed the country, it is worthwhile recapping what we said to Parliament during our submission on the transformation hearings.
We said: “Significant progress has been made and our commitment to the transformation project is unwavering. We acknowledge areas where performance of the banking industry is below agreed targets (and there) are initiatives to address these.”
In turn, Parliament, recommended that the financial sector adopt more ambitious targets.
In May this year, the Board mandated task teams to build on the successes of the industry and to engage stakeholders to further advance transformation.
The task teams, made up of representatives from 21 banks operating in South Africa, were specifically asked to propose ways to:

  • Strengthen the role of banks as a transformative force in society
  • Improve employment equity at senior and executive levels
  • Increase black ownership of banks
  • Open opportunities for black women and black-owned enterprises to provide goods and services to the banking industry

The message from the Board was simple: persistent poverty, unemployment and inequality demands that the industry do more than what is required of it by the Financial Sector Charter.  We are working hard with all stakeholders to make a set of bold commitments to advance the transformation agenda.
The task groups determined that banks should use their core resources and business expertise to support sustainable inclusive economic growth and transformation in the country.
Some of the proposals we will take to the next Financial Sector Summit include:

  1. Concrete and tangible ideas about how we can work more closely with government to boost infrastructure investment in the short to medium term. We will do this by building on the success of the renewable energy program. Work is already underway in this regard.
    BASA, together with ASISA, have already had fruitful and constructive meetings with the Ministers of Economic Development and Public Works.
    The next step is building a programme of work to identify three or four areas where we can work together
  2. Providing support and access to financial services for small and micro enterprises. Banks played a key role, along with other corporates, in the establishment of the R1.4bn SME Fund.
    We are setting very clear targets to increase the procurement of goods and services from black owned and black women owned firms in the next 3 years
  3. Supporting work experience and job creation initiatives, especially for young people. BASA members, together with other corporates, are working to provide one million internships for young people over three years, as part of the Youth Employment Service (YES) initiative.
    Already, all banks (and many other corporates) have committed to the scheme and the focus now shifts to operationalising the program.
  4. Working more closely with the Financial Sector Charter Council, to ensure that it is appropriately capacitated to fulfil its mandate. We are also working to ensure that this platform becomes more effective and that target-setting, monitoring and evaluation occur in a seamless manner
  5. Doubling financing made available to small and medium sized black owned enterprises every 3 years
  6. Increasing consumer education spend from 0.4% of Net Profit After tax (NPAT) to 1% of NPAT.

I firmly believe that at that Summit, we should renew our commitment to transformation.  We should re-affirm our intention to become inwardly transformed to reflect the society in which we operate, and be transformative in our approach to offering financial services.
2. Developing an agenda for the banking sector to play a bigger role in broader socio-economic issues
The second objective which we set for ourselves was to better position the banking sector in the broader socio-economic context.  This is because the banking sector does not exist in a vacuum and is intimately intertwined with the rest of society.
We proactively initiated engagements with the Department of Social Development and the South African Social Security Agency (SASSA) to investigate solutions to the social grants crisis.
Last year, the Board mandated BASA to make the country’s banking infrastructure available for the distribution of social grants, in the national interest. For most of 2017 we were in discussion with SASSA and Department of Social Development to find ways in which banks might assist government with the delivery of social grants.
The relationship between SASSA, BASA and individual banks has improved markedly in the last five months. We are collaborating closely to ensure seamless grants delivery through the use of our collective resources.
To date:

  • Banks have identified 8.2mn existing beneficiary accounts of which 2.6mn were used to pay grants totaling R3bn last month
  • BASA and SASSA are in further discussions with the Information Regulator to ensure that data privacy principles are not breached when marketing to grant recipients.
    Furthermore, this cooperation is being solidified in the form of a Memorandum of Understanding (MoU) between the two organisations.

Land reform
Land reform has been a highly emotional issue and the debates have polarized society with some calling for nationalization of all land and others for a continuation of market assisted mechanisms.  Banks are genuinely committed to playing the transformative role to which I have referred in addressing the land question.
We are fully supportive of land policy and legislation that fulfils the intent of our Constitution and addresses what remains a critical, unaddressed need among many South Africans.
We know that the present patterns of land ownership in the country are not sustainable. We also do not deny that they have their origins in apartheid and colonial conquest.
Land restitution, redistribution and tenure security are a means of providing vulnerable people with access to secure incomes and opportunities to create generational wealth in order to correct the injustices of the past.
BASA encourages all South Africans – land activists, commercial and emerging farmers, people living in traditional communal areas, the landless as well as urban and peri-urban property owners – to participate in the parliamentary process and put forward proposals that support sustainable land reform.
Financial Education
Our flagship financial education program, StarSaver, is now in its 10th year of existence. The programme has reached nearly 1 million learners since its inception. In 2017 alone, the programme reached roughly 140 000 learners in nearly 730 schools.
We have recently concluded an independent evaluation of the program and discovered that, whilst the program has largely met its objectives, there is a need to focus on improving the quality of data collection and training of volunteers.
3. Play a shaping role in legislation and regulatory developments
The regulatory landscape has changed dramatically in the last 12 to 18 months. Key regulatory developments in the year under review include:

  • The implementation of the Twin Peaks regulatory framework including the establishment of the Prudential and Financial Sector Conduct Authoritie
  • The promulgation of the FIC Amendment Act and,
  • The Draft National Credit Amendment Bill amongst others

BASA has participated in the development of all of these important pieces of legislation and policy.   Over all, I believe BASA has represented the banking sector well on all critical regulatory, policy and legislative proposals.
Although not falling in the period under review, the revelations around Venda Building Society (VBS) and other related organisations have demonstrated the importance of regulatory supervision and oversight.
It is a salutary reminder for those of us entrusted by our deposit-holders and the public that we should not take such trust for granted. Ongoing vigilance is required to ensure that trust established over a period of time through sound governance, transparency and good conduct is protected and nurtured and does not evaporate through poor judgment.
4. Restructure the association and improve capacity and capability
In this current context where there is so much happening across all fronts it is important to ensure BASA is able to respond effectively and efficiently.
Last year, we took the decision to restructure the association and improve its capacity to represent the industry, shape the policy and legislative agenda and re-position the sector in an environment, which at times, was hostile.
Some of the key changes included building out the capacity in media and communications as well as economic research.
Further areas requiring attention in the coming year include the streamlining of the processes, information flow, terms of reference and escalation mechanisms from committees and working groups to the management committee, Board Exco and main Board.
As part of this work, we have set ourselves the task of performing an extensive review of the current processes, appointing a company secretary and drawing up of a Board Charter.
Other significant developments
The election of President Ramaphosa presents an opportunity to boost the economy and course-correct a decade of economic underperformance.
As the banking sector we should answer the President’s call to “Lend a hand” – and say: “Thuma mina!”
We are already beginning to see some positive signs on the economic front. These include: the prevention of further downgrades into sub-investment grade, and an improved economic growth outlook for 2018.
We also welcome the return of Minister of Finance, Hon. Nhlanhla Nene and the appointment of Deputy Minister Gungubele.
We are fully committed to supporting them and the entire National Treasury team.
2017 was a challenging year for the sector – with both an unfavourable macroeconomic environment and a highly uncertain political climate. Whilst 2018 appears to have started more positively, a lot of work still lies ahead.
All South Africans across every strata of society need to work together, to translate the confidence we are experiencing into tangible economic gains and a sustained period of robust and inclusive growth, to address the triad of social ills that are the reality for far too many South Africans.
Some of the issues we must address relate to the choices we should exercise to effect what will no doubt be difficult structural economic reforms.
I want to congratulate Cas and team for their hard work and perseverance in what has been a challenging period.
Now, more than ever, continuity is critical. I also want to thank Cas for agreeing to extend his contract for a further two years, in order to allow us sufficient time to find a suitable successor.
I also want to welcome two new member banks that joined BASA this year: TymeDigital by Commonwealth Bank of South Africa and Discovery Bank.
I want to thank my fellow directors for their support not just in the year under review, but over the last two years as I chaired the association.
To the incoming Chair, Mike Brown, I wish you all the best and offer my personal support to make your tenure a successful one.

I Thank You.