Presentation to STANDING COMMITTEE ON FINANCE FINANCIAL SECTOR SUMMIT 14 MARCH 2017

Nedlac Structure Business Busa Labour Government Community Cosatu Women’s National Coalition South African National Civics Organisation South African Youth Council Disabled People of South Africa National Cooperatives Association of South Africa Financial Sector Campaign Coalition Cosatu Fedusa Nactu Department of Trade and Industry National Treasury Department of Public Works Other Departments as needed Department of Labour BBC

Background FSCC in 2002 13 areas of agreement Lessons from 2002 FSCC Summit Failures in Monitoring Assessment follow-up Implementation Consequences

Process FSCC SUMMIT JUNE/JULY 2017 Review the 13 Financial Sector Summit Agreement of 20 August 2002 Review process: Documents Interviews Self-Assessment Questionnaire 3 Workshops Final Draft

FSCC Summit 2002 Agreements Ensuring access to basic financial services. Jointly research the economics of basic financial services. Development of sustainable institutions to serve poor communities. New enabling legislation for 2nd & 3rd tier deposit-taking financial institutions. Proposals on ways to enhance the developmental impact of the regulatory framework. Seek to support financial co-operatives and micro-credit providers. Propose appropriate regulation for micro-lenders to minimise the negative effects of usurious practices. Regulation of credit bureaux. Elimination of Discrimination. End unfair discrimination against people with HIV & AIDS. Capital markets and investment. Development finance institutions (DFIs) and other state-owned financial institutions. Savings initiatives

FINDINGS - General The environment in which 2002 agreements were taken completely different to today. Number of Financial Regulations and Acts have been promulgated. Regulations have tightened up how financial support and aid is provided More people have access to financial products. More cooperation between the public and private sectors around financial matters. Some of the 13 agreements are difficult to measure.

FINDINGS - Access to Basic Financial Services All parties agree that more people have access to bank accounts. FinMark Trust - move from 42% in 2003 - 77% in 2016 (FinScope study) However, only 58% if SASSA card holders excluded NCR indicate that 24.08 million people are credit active consumers Good credit standing increased from 10.71 m ppl (Dec 13) to 14.4 m ppl (Sep 16) Targeted products for HDIs developed. Service charges are high. Rural areas still seem to be neglected.

FINDINGS - New enabling legislation for 2nd & 3rd tier deposit-taking financial institutions Dedicated Banks Bill – 2nd tier financial institution - Never promulgated: for companies interested in entering the banking system as Savings and Savings and Loans Cooperative Bank Act (40 of 2007) – 3rd tier financial institution 2 Cooperative banks established 32 Cooperative Financial Institutions established Establishment of Cooperatives Bank Development Agency Act as regulator for cooperative financial institutions and has a support mechanism. Very little money provided - less than R40 m over four year period No real understanding of cooperatives in SA

FINDINGS - Regulation of credit bureau The National Credit Act (34 of 2005) aims to promote a fair and non-discriminatory marketplace. National Credit Regulator 14 credit bureaus 5,337 credit providers 1,959 Debt Councillors Major overhaul of the credit processes and procedures in South Africa Credit bureaus keeps credit record of individuals whether good or bad Judgements and any other listing to be removed within seven days after final payment is made. Debt counselling to restructure debt into affordable payments. National Credit Regulator plays a regulatory role over credit bureaus, credit providers and debt counsellors

FINDINGS - Elimination of Discrimination Codes of conduct around discrimination found in most financial institutions. Special products for poorer people being fashioned. Geographical discrimination still around - financial institutions / infrastructure less available in historic townships or rural areas. Class discrimination on the rise - poorer people more likely to be financially unfairly treated by finance institutions. Red-lining still happening - however a lot more subtle – example: tracking companies now highlighting certain areas as 'dangerous'

FINDINGS - unfair discrimination HIV & AIDS The situation around HIV and AIDS is completely different today than it was in 2002. Insurance products (including life insurance) now available to persons with HIV. Credit life insurance on outstanding credit also available Stringent criteria set out for insurance products Premiums are higher than normal - risk factor as indicated by the industry some regard this as discrimination. The general negative stigma within communities still high. Financial institutions should play a role in changing the negative stigma

FINDINGS - Capital markets and investment Developmental investment initially seen as only government driven. Consensus that the private sector is starting to play a role in developmental projects Example is around renewable energy (could be a huge profit motive). There is an increase in public private partnerships Opinion differs on how much of a role the private sector is playing in developmental investment. Private sector seems to need incentives rather than commitment to developmental investment. No single database from government showing all developmental projects/investment opportunities.

FINDINGS - Savings initiatives Specialised savings products including the tax free savings account. There is agreement that savings in South Africa is a problem - savings seem to have stagnated. Finscope 33% of South Africans saving - 15% through formal banks (2016) Consensus is that savings is very difficult when disposable income is low. Whatever disposable income in black peoples’ households becomes the 'black tax'

FSCC SUMMIT 2017 Date: Envisaged to be convened in June. An exact date to be confirmed. Venue: to be confirmed. Delegations: 60 Delegates per constituency. Speakers: to be confirmed. Funding: Nedlac will fund the summit.

FSCC SUMMIT 2017 Measurable deliverables Clear time-frames Regular meetings High level political overview Consequences for non-delivery

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