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SA banks take bold step on black empowerment

December 2003

South Africa’s banks and financial institutions have devised a groundbreaking empowerment charter that aims to pass control of at least a quarter of the sector to black people by 2010.

The charter, which has been drawn up by ten finance industry associations, commits the sector to having a quarter of all senior management positions filled by black people by 2008, with similar targets for middle and lower management. At present only one in ten of senior managers in banks and financial institutions is black.

The voluntary charter has been hailed as a breakthrough by sector leaders, government ministers, black groups and trade unions.

It commits banks and financial institutions to sourcing 50 per cent of the value of all procurement from companies that are partially owned and controlled by black people by 2008. The minimum requirement is five per cent ownership of companies and ‘participation in control by black people’.

By the same date, banks and institutions should make savings products accessible to four out of five poor people, spend at least 0.2 per cent of profits on educating consumers, and put 0.5 per cent of profits into social investment programmes.

The overall effect will be to put an estimated 50billion rand ($12bn, £7bn) of assets into black hands within seven years.

From the end of 2004 every financial institution will undertake to report annually to a new independent body, the Charter Council, which will oversee progress.

Sector associations that have written the charter include the Banking Council of South Africa, the Foreign Bankers Association, the Investment Managers Association and the South African Insurers Association. Among companies committed to the charter through their associations are Absa Bank, African Bank, Barclays Bank of South Africa and First National Bank. They have been joined by multinationals, including ABN Amro, Citibank and HSBC. The charter, which is not yet finalized, comes into force on 1 January 2004, and sets out plans until the end of 2014.

A similar charter for mining companies came into effect this year. However, it was produced largely at the government’s behest and did not receive universal support from business, at least initially.




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