Transcript Conversion to Sector Code

PRESENTATION TO:
PARLIAMENT STANDING COMMITTEE ON
FINANCE
Financial Sector Overview
• SA largest by nominal GDP (21,5% of GDP), followed
by manufacturing and then mining
• Second fastest growing sector (5,5% from 19942009), after construction (5,7%)
• Internationally active
• Central to the growth of the rest of the economy
• Capital intensive
• High concentration levels (84% of bank balance
sheets accounted by the big 4 banks)
Financial Sector Overview
• Market Capitalization - R554 449m
• Employment – 275 965
• Assets
»Banks
3 109 bn
»Retirement Funds
1 746 bn
»Long-term insurance 1 375 bn
»Collective Investments 908 bn
»Short-term Insurance
78 bn
Regulation
• Highly regulated sector
• Entry and participation are licensed
• Risk based prudential and market conduct
regulation
– Stability; Efficiency; Consumer and Investor
protection; Market confidence
• South African Reserve Bank
– Registrar of Banks; Supervisor of
cooperative banks; National Payment
System; Exchange Control
Regulation
• Financial Services Board
– Pension funds; Insurance; Collective
Investments; Financial Advisory and
Intermediary Services; Market abuse;
consumer education
• Cooperative Bank Development Agency
• Financial Intelligence Centre
• National Credit Regulator
Financial Sector Charter
Objectives
• Establish framework and underlying
principles for BEE implementation in the
sector
• Provide basis for engagement with other
stakeholders
• Establish targets and other responsibilities
• Outline processes for implementing Charter
and progress monitoring
The Participants
Constituency
1. Government:
 National Treasury
 Department of Trade and Industry
 Presidency
Representation
2
1
1
2. NEDLAC Labour Constituency (COSATU,
NACTU and FEDUSA
4
3. NEDLAC Community Constituency
4
3. Association of Black Securities and
Investment Professionals (ABSIP)
3
The Participants
Constituency
Representation
4.Trade Associations
• Savings and Investment Association
(ASISA)
• Banking Association of South Africa
• International Bankers’ Association
• South African Insurance Association
(SAIA)
• JSE Securities Exchange
6
Transformation Commitments
• Accelerating employment equity and skills
development within the sector;
• Increasing procurement from BEE-accredited
enterprises;
• Improving access to financial services
• Increasing investment in low-income
housing, black-owned SMME’s, agriculture
and transformational infrastructure
• Increasing funding for BEE transaction
financing; and
• Achieving BEE ownership and control targets.
Overview
CHARTER TRANSFORMATION AREAS
2008 Achievements
• Human Resource Development
– Senior management
• Black people 25.37% [ 20%-30% ]
• Black women 8.05% [ 4%]
– Middle management
• Black people 38.88% [ 30%]• Black women 17.64% [ 10%]
– Junior management
• Black people 53.14% [ 40%-50% ]
• Black women 31.25% [ 15% ]
2008 Achievements
• Skills Development
– R854m spent to train black staff
– Training of Black Staff- 1.71% [ 1.5% ]
– Learnerships – 1.46% [1.5%]
2008 Achievements
• R64.64bn in targeted investment
–
–
–
–
R17.69bn Transformational infrastructure [ R25bn ]
R31.14bn Low-Income Housing [ R32bn ]
R11.37bn SME [ R5bn ]
R4.44bn Agricultural development [ R1.5bn ]
• R101.20bn in BEE financing [ R50bn ]
• Access to Financial Services [80% of LSM1-5
within 15km radius of full service]
2008 Achievements
– Transaction and savings products
–
–
–
–
Services Points 74.72% [Target 80]
Full Services Points 74.72% [Target 80%]
Bank Savings products and services [97.91% of target]
Number of active Mzansi accounts: 2,308,466
2008 Achievements
Procurement
- R59.5bn spent on black suppliers = 59.42% sector
procurement [ ]
Ownership - Direct Black Ownership in sector – 11% [ 10% ]
Management Control
–
–
–
–
Black Directors
Black Women Directors
Black Women Executives
Black Executives
28.41% [ 33% ]
12.06% [ 11% ]
7.64% [ 4% ]
40.92% [ 4% ]
Corporate Social Investment
.088% of profit after tax [ 0.5% ]
Challenges
• Low targets
• Under achievements on some existing targets
• Other challenges
– Geographic concentration
– Regulatory impediments in Housing
– Retirement Funds institutions
• Gazetting of Charter as Sector Code
Conversion to Sector Code
• Areas peculiar to the financial sector
– Access to financial services
– Empowerment financing
– Targeted investments
• Areas which will align with slight variances
– Procurement/Enterprise Development
– Definition of “Black”
– Skills Development
– CSI
– Employment Equity
– Black Women
– Management Control
• Area under discussion
– Ownership
Conversion to Sector Code
Alignment of the Ownership element
1. Direct Ownership
–
–
FSC requirements : 10%
Codes requirements : 15%
Status : Agreement, 10% direct ownership plus 5% equity equivalent option
2. Ownership recognition after exit of Black partners
–
FSC : Once Empowered Always Empowered
–
Codes : Black partners to be replaced within 3 years
Status : Discussions ongoing
Conversion to Sector Code
•
The distribution of the 5% equity equivalent was
also agreed as follows (R17,6bn):
– 20% for Enterprise Development and
Procurement from Co-operatives and Black
SMMEs
– 25% for Co-operative Financing and Access to
Financial services
– 40% for Targeted Investments (eg Black
Agriculture, Black SMES, Transformational
Infrastructure)
– 15% for B-BBEE Transaction Financing
Looking Ahead
• Gazetting of the areas already agreed to –
November 2010
• Gazetting of the revisions and updates of the rest of
the FSC – March 2011
• Process of review already underway