Nonkululeko Gobodo says it’s time to engage the South African Reserve Bank on the high barriers to entry into the banking sector.
- Nonkululeko Gobodo says South Africa needs a black-owned bank to help fill the gap high barriers to entry into the banking sector.
- She says South Africa needs leadership that will finally “dissect” the current economic structure that makes black people feel like “unwanted visitors” to big business and when they walk into a bank to find out. ask for help.
- She believes that the South African banking sector cannot behave as if it operates in a first world country.
As long as the South African Reserve Bank meets its strict requirements to apply for a banking license, most blacks will remain beggars, says Nonkululeko Gobodo, South Africa’s first black AC.
Speaking at the Black Business Council summit on Wednesday, Gobodo said she respects the Reserve Bank, but the high barriers to entry it has put in place for new entrants to banking are a “very sad issue. “.
“It’s like we live in this perfect first world country. So the banking industry has to be perfect and comparable to the world. As long as we have things like that, how are we ever going to get black people to stop begging unless we have our own black banks? We need a framework that will open the sector up to blacks, ”Gobodo said.
She said South Africa now needs leadership that will end up “dissecting” the current economic structure that makes black people feel like “unwanted visitors” in big business and when entering a business. bank to ask for help.
“We must engage the Reserve Bank around this issue [of bank ownership], because why is Nigeria capable of having many black banks, and why are we not able to do so when we have a more sophisticated economy? “asked Gobodo.
She said that even in institutions meant to advance black industrialists and black property in the economy, like the Industrial Development Corporation (IDC), most people have to beg because the requirements are so strict that they make it difficult for most black businesses to obtain financing.
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Gobodo said what is more concerning is that most of the economies in South Africa are held by pension funds, which manage black money. But when black businesses needed the financial sector most in 2020, they spat it out. Most of the loans – the small disbursement that took place under the government’s loan guarantee program – went to white-owned businesses, she said.
Not all like VBS
Ubank’s interim CEO Keshan Pillay said there are good black-owned banks like Ubank that didn’t end up like the VBS mutual bank.
He said Ubank was transforming itself into a “bank of choice for workers” and not just serving workers in the mining industry.
He said banks need to handle depositors’ money responsibly so South Africa does not end up with another VBS, but the problem was that there was a chronic shortage of financial support for small and medium-sized enterprises (SMEs) in the country, and the industry should do more. He said the loan guarantee scheme was a classic case of this rejection, as 95% of SMEs that approached banks for funding were rejected.
“The point is, yes, we are regulated. So we can bend the rules but not break them,” he said.
Stephen Seaka, BEE finance manager at Absa CIB, said what happened during the Covid-19 pandemic was that banks’ balance sheets were under strain. Everything has become a question of liquidity and preservation of capital. The amount of loan restructuring they did for their clients was huge, and the Reserve Bank also urged banks to continue to be cautious when lending under the loan guarantee program.
“I remember there was a time when we only looked at our customers. We couldn’t even afford to take someone new because of preserving your cash flow. You didn’t even know if your customers were going. be put into liquidation, ”he said. mentionned.
That said, Seaka said he agreed that the financial services industry must be at the forefront of every country’s transformation.