‘Banks are not supporting production’
BONGANI HANS firstname.lastname@example.org
African News Agency
COMMERCIAL banks have seemingly been undermining regulatory authorities in developing countries for a long time by refusing to be held accountable, says outgoing commissioner of the Competition Commission, Tembinkosi Bonakele. He cited the example of the rand manipulation saga where some banks such as Standard Chartered have admitted guilt to rand fixing in the US, but resist even pleading in their case in South Africa. Concurring with Bonakele, Cosatu spokesperson Sizwe Pamla said the federation remained resolute in its call for the creation of state banks to give South Africans alternatives. Talking to SABC’s Vuyo Mvoko recently, Bonakele said banks were among the worst in the world when it came to supporting the economy. “It is a very powerful sector. But also, regulators traditionally have been quite conservative in their approach to financial services. There is the idea of systemic risk and so on.” He said those who should hold the banks to account tended to avoid doing so to maintain stability. Bonakele said the after findings by the commission that banks had manipulated currency, none of the local banks had come forward to defend themselves. “The case has still not been heard on the merits because banks are still resisting even pleading their case.” He said South Africa had, through the commission, been one of the few countries that had at least tried to hold the financial sector to account. He acknowledged financial services were important in South Africa and their importance had grown with the financialisation of the economy. Bonakele said the power of the banks had come at the expense of other sectors, with manufacturing being a good example. He said that had the banks been doing what they were supposed to do, such as financing SMMEs and helping black people to participate in the economy, there would be no need for the state bank. “And it is banks that must finance these sectors. If you think about it, (what) is really the contribution they make in transforming the economy? Actually, not just transforming it in racial terms but just infusing dynamism, innovation, infusing that participation that would enable it to grow and absorb more and more people,” he said. But most concerning, he said, was that banks were unwilling to finance and expand production. Instead, they financed consumption. “You can easily get a bank to finance a car for R1m. But when you look at how difficult it is to get it to finance a house, that just does not happen. “We need more risk taken, we need banks to back entrepreneurs they don’t know, because black people have not been funded in this country because of apartheid. So they don’t know these people, therefore … they must diversify the people they fund,” said Bonakele. Pamla said with the lack of manufacturing industries, South Africa remained the warehouse of international suppliers. He blamed the banks and the ANC for this. He said the ANC was sitting with a resolution of creating a state bank. The recent policy conference did not really do anything to implement it.