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·      Transformation and economic inclusion cannot be achieved without access to capital ·      Oligopoly in the finance sector must be dismantled ·      Retirement funds are under-utilised for development

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Sizwe sama Yende

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National Empowerment Fund board chairperson, Dr Nthabiseng Moleko, has called on the reform of the financial sector for positive outcomes of Broad Based Black Economic Empowerment (B-BBEE) to be realized.

Moleko told participants during the Frank Talk Dialogue on B-BBEE in Durban on Saturday that the country needed to deal with banks’ resistance to private sector credit extension.

She said that government allocated R500 billion to reset the economy following the disastrous effects of the Covid-19 pandemic, but banks resisted the government’s offer of R200 billion as credit guarantee for them to fund SMMEs. 

“Banks refused to come on board. For us recover and rebound, our banks said we are not interested,” Moleko said.

“We’ve to reform the financial sector if we’re serious about changing outcomes of B-BBEE.  We’ve got to change the financial sector ecosystem layout, and we’ve got to deal with banks’ resistance to private sector credit extension. We can’t talk about advancing transformation, inclusion without access to capital,” she added.

Moleko also called for oligopoly in the finance sector to be dealt with. Moleko said it was too easy to get finance for a house or a car, but difficult for productive investment or business.

“It’s almost next to impossible (to get finance for business). We invest largely in mortgage advance or things that will not necessarily take us to industrialisation.”

Moleko indicated that the South African economy had failed to reach 5.5% growth since 1994 under different economic regimes such as the Growth Employment and Redistribution (Gear), Accelerated and Shared Growth Initiative for South Africa (Asgisa) and National Development Plan (NDP) 2030 because there has not been enough inclusion of blacks in the economy.

“Our growth is expected to be at 1.6 %, under 2%. This is the worst we have seen over the last decade or so. The gap has widened. We’re worsening our target and economic impact because because we don’t have vociferous and aggressive inclusion of the majority blacks in our economy,” Moleko said. 

This, she said, was impeding the country’s efforts to drive up growth considerably and even employment. Moleko said most countries were performing at around 3% to 5% and were recovering from Covid-19 impacts while South Africa had not. 

Moleko said that SA was a wealthy country and had to use its domestic resources such as the retirement funds to grow the economy. The country’s stock market capitalisation as percentage of GDP has more than doubled to over 300%. The financial market as worth R22 trillion and pension funds made R14 trillion of that.

“This R22 trillion – how can it help us? No one is going to save SA. We need to use our domestic resources so that we scale up our efforts and see impact. We’ve got retirement funds and are underutilised for national development programmes. We don’t say government must carelessly take your pensions. We don’t understand how nations have used financial markets to grow their development. We must use our capital markets, and not rely only on the balance sheet of the state,” Moleko said.

She said that the apartheid government used pension funds for development and other European countries were doing the same today.

 “We’ve been engineered not to touch pension funds after 1994. We’ve been told its dangerous. Eskom, Rand Water Bank, Land and Agriculture Bank were all funded from pension funds before 1994,” Moleko said.