South African Banks and Public Perception: Misplaced Energy at The Wrong Entity

2017-07-03 09:53

A sliver of pride has been afforded to us this past week, as South Africa’s banks ranked among the best in the world by UK consultancy firm Lafferty’s recent report. With Capitec attaining the only five star rating among others including illustrious outfits (across 32 countries) like Barclays and Bank of America, South African banks’ integrity, strategy and customer service ratings are perhaps higher than what we would expect. This juxtaposed rather interestingly with recent events surrounding recommendations by the Public Protector Busisiwe Mkwebhane, who suggested the South African Reserve Bank (SARB) be placed under more direct auspices of the South African Government.

This stems from her report looking into state bailout given to the failing Bankorp outfit during the latter 1980’s. Maladministration and confidence in state governing capacity aside, the foundation of Mkwebhane’s recommendations suggest her powers be placed above those of the constitution and parliament at large. It's Foreseeable that courts will dismiss the legal bases of her argument as invalid in the coming weeks (to no surprise). Her suggestion as well that the SARB play a part in contributing to the socio-economic development of South Africa also suggests that they play a more pro-active role rather than a reactive one. Not only is this outside the purview of the bank but also shifts investor confidence in the country (something we can ill afford now in a post-downgrade phase). The mandate of the South African Reserve Bank rather, is one of stabilization (inflation) so the ‘real economy’ is allowed to flourish.

Mining and Agriculture as considerable bases for our economy have been joined by finance and business services this previous year as the sector reporting the greatest increase in gross earnings. This only indicates greater numbers of businesses and individuals utilizing financial and related services. Their obvious concerns pending the outcome of weighing the Public Protector's suggestions means alot for the economy at large and cannot be taken lightly. Commercial banks in years past have been found to be expanding their business to more common segments of the South African market, with branch downsizing and digitized service delivery among some of the measures taken to accommodate entry level markets (this according to a Finmark report four years ago). Although a rise in unsecured lending has been recorded, this has only been at the behest of customers. This is probably a means for most in trying to exercise social mobility (sending children to university or open a business). It should be argued here, that banks, although constituting a considerable part of our economy, are facilitators of money and not the gatekeepers of wealth.

Gupta owned media enterprises and, most especially (doctors of spin) Bell Pottinger, have done an exceptional job in promoting capital in the form of banks and corporates as deviant entities whom atop sit whites and foreigners. The irony here is that our banks are some of the most compliant and innovative in the world when it comes to financial products and services, whether white owned and run or not. They should be our partner in development, along with numerous other stakeholders. Perhaps the banking sectors strong competition and compliance should be lent to other arenas which would facilitate greater emancipation

The telecoms industry, also an oligopoly comprising 4 big companies (Vodacom, MTN, Cell-C and Telkom Mobile, Virgin-mobile being almost nothing to speak of) could well learn something from the banking sector in terms of easing access and pushing innovation. Data rates pivotal to internet access and more importantly, new educational platforms, are beyond the reach of most South Africans. Digital access in today's day and age is essential for almost all services and cannot be at the fingertips of a few. Contrasted to banking , the SA telecoms sector boasts the second highest rates in the world behind Brazil. If serious thought and energy were directed to any sector it should be this one. Blockchain (Bitcoin), MOOCs (massive open online courses) and various other forms modern day life are all becoming digitized and democratized. Having greater ease of access to the digital services and information is more than simply a way of entertaining ourselves. It will become the means by which we change and shift our society.

Let's not be left behind.

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