By Masibongwe Sihlahla
South Africa's banking sector, a cornerstone of its economy, remains largely exclusive to the white minority even after 30 years of democracy. This historical inequality perpetuates economic disparities and hinders the country's progress towards a just and equitable society.
A radical transformation is imperative to address this systemic injustice and empower the marginalised black majority. Observing the unchanged rows of shacks from Cape Town International Airport to Hermanus, one realises that the control of our banking sector serves only the elite. Under apartheid, access to capital was a key strategy that lifted many poor Afrikaners out of poverty. It is well known that the hands that control the banking sector control the world.
An Urgent Call for Change
There is a desperate need for change as our people are mired in poverty, becoming poorer by the day. Decades of apartheid-era policies created a financial system that systematically excluded black people, keeping them as sources of cheap labour. Millions of black South Africans lacked access to basic banking services, hindering their economic participation—a situation that remains today as if apartheid never left. The unequal distribution of wealth is a direct result of a banking sector that has concentrated wealth in the hands of a white minority. Black people are under-represented in leadership positions within the banking industry, and even those in power are limited by boardroom policies, making them appear as mere ornaments.
Practical Strategies to Achieve Change
- Financial Inclusion: Access to basic banking services must be rolled out to more people. Affordable accounts, debit cards, and digital platforms should be offered without hidden charges.
- Tailored Financial Products: Banks should develop products specifically to meet the needs of low-income black individuals and small businesses.
- Financial Literacy: Banks and the state should invest in financial literacy, educating the public about financial management and entrepreneurship. The Department of Basic Education should include this in the Life Orientation syllabus.
- Mobile Banking: The state must ensure that banks utilize mobile banking and agent networks to reach underserved communities, which is also cheaper for consumers.
- Increase Black Ownership: Ownership and control of the banking sector remain in the hands of the white minority. Policies must be implemented to promote black ownership of banks and financial institutions.
- Empower Black Leadership: The state should create opportunities for black professionals to ascend to top management positions, rather than using them as ornaments to comply with employment equity targets.
- Strengthen BBBEE Regulations: The state needs to enforce BBBEE regulations within the banking sector properly.
- Accessible Credit: The state must ensure affordable and accessible credit for blacks by expanding lending to black-owned businesses. Free access to capital to support entrepreneurship and job creation should be provided, with the state as guarantor.
- Reducing interest rates will lower the cost of borrowing for black individuals and businesses, acting as a catalyst for economic growth.
- Historical context: Many brilliant black students were denied student loans due to lack of a formal address, a tactic that served the Apartheid regime by keeping blacks impoverished. Under democracy, a simple legislative change allowed a letter from a ward councillor to suffice as an address, transforming millions of lives overnight. Similarly, developing alternative credit scoring models that consider factors beyond traditional credit history can further promote equality. Our democracy cannot survive inequality; we must act swiftly to prevent further societal unrest.
- Customer centricity should be key in improving service, with banks providing responsive and efficient support to black customers.
- Addressing over-indebtedness: Issues can be addressed through debt counselling and restructuring options, as poor black customers are willing to repay loans if given proper assistance.
- Preventing predatory lending: The state must implement measures to prevent predatory lending practices that exploit the poor.
Regulatory framework
- The state must strengthen financial regulations to ensure consumer protection and market stability.
- Promoting competition by encouraging new, inclusive financial service providers will give consumers more choices and drive down costs.
- Supporting cooperative banking by formalizing STOKVELS and fostering community-owned financial institutions has proven successful.
- Transforming the banking sector will face resistance from vested white monopoly interests, but it presents immense opportunities for economic growth, social development, and reconciliation. Addressing historical injustices will help build a more inclusive and prosperous future. For 30 years, we have failed; our society cannot afford further delays. We need a call to change, not a call to arms.
The way forward
- Collaboration between the government, banking industry, civil society, and the black community is essential. Political will, regulatory changes, industry commitment, and community engagement are necessary.
- By prioritising financial inclusion, ownership, affordability, and customer centricity, we can create a banking sector that truly serves the needs of its people.
- I have refrained from calling for the nationalization of the Reserve Bank. Instead, the Post Bank should fall directly under Treasury and a Director General, not be run as a private institute, to ensure accountability to taxpayers.
- Legislation should prevent banks from closing accounts for political reasons, as seen in the case of Sekunjalo accounts. Accounts used for criminal activities should be closed, but political machinations should not be allowed to disrupt businesses.
* Masibongwe Sihlahla is an independent writer and political commentator.
** The views expressed do not necessarily reflect the views of Independent Media or IOL.