BASA's 2024 report highlights transformation in South African banking South African banks provided R337bn for financing for empowerment and transformational infrastructure. File picture: Oupa Mokoena. Independent Newspapers
While local banks have made significant strides in black ownership and empowerment financing, they are struggling to meet key transformation targets in senior and top senior management levels, the latest Banking Association of South Africa (Basa) report says.
According to Basa's 2024 Transformation in Banking Report, released on Thursday, which covers 96% of bank assets in South Africa, the banking sector has exceeded targets for black ownership and economic interest, with black ownership standing at 38% for 2023, well above the 25% target.
However, despite this progress in lower levels of management, senior and top senior management remain a concern, with only 51% of senior managers and 36% of top senior managers being black, falling short of the 60% target.
Of note, 90% of junior managers in banks are black, above a target of 80%.
But increased regulation is unlikely to result in further sustainable change, the report noted
This discrepancy has raised concerns in the wake of a Parliamentary grilling held just a day ago, where MPs criticized the banks for slow progress in transformation, questioning their conduct, high fees, and lack of inclusivity in the sector.
Parliamentary standing committee on finance chairperson Joe Maswanganyi said during his opening remarks that the country cannot afford a financial sector that excludes the majority outside the mainstream.
Basa managing director Bongiwe Kunene said the strong pipeline of junior and mid-level black managers is a sure indication that senior managers will soon reflect the demographics of the country. Already, 48% of bank directors are black, against a target of 50%.
“Banks’ contribution to the transformation of the economy is also beyond the Financial Sector Code's (FSC) target of R130 billion from 2018 to 2023. In 2023, banks provided R337 billion in empowerment financing, of which a total of R180bn went to affordable housing, transformational infrastructure, and black small and agricultural businesses,” Kunene said.
Nine banks, including South Africa’s biggest, have already reached level 1 BBEE status, which means that fully empowered banks have over 83% of the South African market share (by assets).
“Except for 2022, when South Africa was still reeling from the economic impact of the Covid-19 pandemic, banks have been increasing their performance on key transformation metrics every year,” she explained.
Kunene said, “Leadership changes mean there is more hope this year that the policy and ideological logjams and weak administration in the Financial Sector Transformation Council will be resolved and good faith and pragmatic discussions about further meaningful transformation in the financial sector can take place.”
Basa chair Mary Vilakazi said that ongoing transformation and skills development, with a focus on women, means that there is an increasing proportion of black women managers. “In 2023, black women were: 62% of junior bank managers, 38% of middle bank managers, 25% of senior bank managers, 11% of top senior bank managers, and 24% of bank directors.”
Vilakazi added that banks provided R337bn for financing for empowerment and transformational infrastructure. This includes R45bn for affordable housing, R40bn for black small and medium enterprises, R26bn to finance black agriculture, R69bn in transformational infrastructure, and R157bn to finance black economic empowerment transactions and Black Business Growth Funding.”
Vilakazi said that it is the business of banks to finance economic activity which leads to inclusive, sustainable economic growth. “Beyond the FSC targets, in 2023, banks provided: R366bn for investment in manufacturing, R215bn for investment in infrastructure, R209bn for investment in agriculture, R325bn for investment in sustainable development projects, and R261bn for small businesses.”
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