SA’s bank CEOs met the African National Congress (ANC) economic transformation committee yesterday to raise their concerns about the party’s economic policy discussion documents.
The ANC last month released policy documents ahead of its policy conference in June. Although it is not clear what the banks are worried about, the ANC’s documents criticise the increased "financialisation" of SA’s economy.
The ANC’s economic transformation committee was invited to the meeting yesterday by the Banking Association of SA, an industry body representing all registered banks. The CEOs of the major banks attended the meeting.
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A person close to the meeting said the bank chiefs had told the ANC they wanted to make detailed responses on some aspects of the policy documents.
Banking Association CEO Cas Coovadia confirmed the "closed" meeting, but would not give further details, saying it was "private".
ANC economic policy committee member Enoch Godongwana said yesterday: "We can confirm that we did meet with them at their request. They said they want to make a detailed presentation on some of the views in our policy documents."
In one, the ANC refers to an increased dependence "on financial services and on financial returns", rather than the production of new value through agriculture, mining, manufacturing and value-added services. The party said this "fosters speculation and asset bubbles".
"In the US, financialisation of the economy led to an overextension of credit to families, especially for housing. In Europe, it led to high government borrowing in a few countries, including for infrastructure as well as consumption.
"To some extent, these problems also emerged in SA. The financial sector grew 8,5% a year between 1994 and 2008, while the rest of the economy grew just 3,5% a year."
The sector contributed the most to SA’s corporate tax base in the 2011-12 financial year, data show.
Another policy paper suggests the state should "regulate a substantial part of retirement and life assurance funds to be invested in state-owned enterprise and/or development finance institution financial instruments".