Trade and Industry Minister Rob Davies says he is 'proudly aware' of black empowerment gains. Picture: TREVOR SAMSON
Rob Davies. Picture: TREVOR SAMSON

THE financial services sector has committed itself to spending R122bn on various forms of black economic empowerment (BEE) over a period of five years.

The commitment was agreed by the Financial Services Sector Charter Council, which also thrashed out the new draft amended broad-based BEE code for the sector. The draft was published recently in the Government Gazette for public comment until May 17.

The sector includes banks, long-and short-term insurers, retirement-fund administrators, collective investment scheme companies, brokers and private equity firms, among others. The new draft code harmonises the existing code published in 2012 with the Department of Trade and Industry’s amended codes of good practice.

The council’s CEO Isaac Ramputa said the targeted R122bn would include both old and new money as well as the funding of the black industrialists programme. It would also be spent by the sector on financing empowerment transactions, providing finance for small, medium-sized and micro enterprises, affordable housing, infrastructure projects and financing risk capital.

The 2012 financial sector codes committed banks to R80bn in empowerment financing over the five years to 2017 and long-term insurers to R42bn — giving a total of R122bn.

The new draft financial services code’s scorecard has two unique elements that distinguish it from the general codes of good practice, namely empowerment-financing and access to financial services that are specific to the sector. Empowerment-financing includes support for black industrialists, a R100bn programme that government launched last year.

Trade and Industry Minister Rob Davies said the aim of these two elements was "to ensure support for black-owned entities (including black industrialists) and to ensure that people in marginalised areas have access to transaction, sales, and service points".

He said most of the principles of the old code relating to ownership had been retained in the draft new code subject to periodic review by the charter council.

Reports would have to be submitted to the minister on the performance and dilution of black ownership in the sector.

Another key difference between the 2012 code and the new draft is that a bonus point is awarded for the employment of Africans at board level and in executive, senior, middle and junior management positions. This would be in addition to the points awarded for employing blacks in general at these levels. The 2012 code gave special attention to black women, but did not differentiate Africans from other blacks.

Mr Ramputa said Africans had been targeted in order to tackle the lack of progress made by the industry with their advancement.

He said the 2014 progress report of the Financial Services Sector Charter Council would be released shortly and would demonstrate that while the industry had made strong advances on black ownership, there were challenges with regard to human issues such as skills development and the appointment of black managers.

Mr Ramputa said the draft code had been thrashed out by members of the council, who include representatives of the various segments of the financial services industry, as well as the community and labour. If there were concerns, these had been dealt with during the council’s deliberations.

"Obviously, there are still some things we need to work on, for instance to clarify what is meant by black industrialists and how this will work in relation to the scorecard," Mr Ramputa said.

No change has been made to the "once empowered always empowered" principle embodied in the 2012 code, but the manner of achieving the required points will be linked to participating in funding black industrialists.