South African banking sector accused of discrimination and duplicity

by Kim Heller

Once again, South African banks stand accused of discrimination and duplicity. This week the banking sector came under scrutiny in Parliament. Questions around the lack of meaningful transformation, inadequate funding for black owned businesses, racial profiling, and politically motivated de-banking practices, were raised.

If South African banks are prejudicing and disadvantaging black South Africans by not affording equal access to funding and financial capital, it would be a serious contravention of the South African Constitution. And it would be a terrible betrayal of the spirit of democracy that is the precious and priceless currency of a free and just South Africa.

If South African banks are debanking and jeopardising the financial wellbeing of certain individuals and organisations for simply holding a political view that deviates from the master narrative, it would be a sinister signal of an oppressive economic and societal superstructure.

Reminiscent of apartheid.

Freedom from apartheid did not translate into systemic or institutional transformation. The levers of the economy and the vital value chain of financial power and financial access were tinkered and toyed with in a manner that would keep white power intact. The battle for a fundamental democratisation and repurposing of the financial sector and capital flows for a truly equitable and just society has yet to won. Financial access and opportunities continue to be un- evenly distributed across the population. This despite progressive legislation, a financial sector charter, and numerous summits.

Thirty years into democracy, South Africa is the world’s most unequal society. The enormous disparities in wealth between black and white South Africans serves as a daily reminder of the undone legacy of apartheid and unfinished work of transformation.

During last week’s Parliamentary session with banks and regulators, member of Parliament for the MK party, and member of the Portfolio Committee on Trade, Industry, and Competition and the Standing Committee, Brian Molefe, did not mince his words. Speaking harshly about white dominance in the financial sector, Molefe said that banks are serving a “ privileged few while shutting out the majority from economic participation.” His description of South Africa as “two economies in one,” comprised of a marginalised black majority and a privileged white minority, is indeed, the true state of the nation.

On paper, the South African banking sector appears to be performing well on matters of transformation. The Banking Association of South Africa (BASA) presented a seemingly impressive set of statistics to the Parliamentary committee. The report showed that banks were ahead of the Financial Sector Charter’s targets in terms of black ownership of local banks (38%) against a target of 25 percent. During 2023, R337 billion in empowerment financing, was provided. A large share of this financing, R180 billion, went to affordable housing, transformational infrastructure, and black-owned small businesses and agricultural ventures.

Sometimes real-life human stories of financial dislocation, discrimination and unfair debanking count more than statistics and numbers. Mary Vilakazi, the chairperson of the Banking Association, boldly admitted that ‘the scorecard doesn’t effectively measure outcomes of banks’ transformation and empowerment efforts. She said, “Both input and outcomes should be measured to ensure the programs “are making a real difference.”

A spotlight on the banking sector should look, closely and critically, at the assumptions that inform the current matrix and measurement of transformation. There is a need for new thought leadership and investment in consciously creating new means and models of financial power. In 2022, Dr Iqbal Survé, Chairperson of Sekunjalo Investment Holdings called for a new financial compact to “accelerate entrepreneurship, reduce inequality, and break up the concentrated efforts of the current banking oligopoly”.

A new paradigm is urgently required in order to ensure meaningful financial and economic participation for all.

The words of black consciousness leader, Steve Biko, written so many decades ago, in the height of apartheid, are still relevant today. “It goes without saying that the black people of South Africa, in order to make the necessary strides in the new direction they are thinking of, have to take a long look at how they can use their economic power to their advantage. As the situation stands today, money from the black world tends to take a unidirectional flow to the white society. Blacks buy from white supermarkets, white greengrocers, white bottle stores, white chemists, and, to crown it all, those who can, bank at white-owned banks”.

Biko continued, “Being part of an exploitative society in which we are often the direct objects of exploitation, we need to evolve a strategy towards our economic situation. Our money from the townships takes a one-way journey to white shops and white banks, and all we do in our lives is pay the white man either with labour or in coin.”

The absence of a bank that is fully owned and controlled by black South Africans is a serious indictment of the post 1994 political dispensation.

Speaking at the Black Business Council's summit in 2021, businesswoman Nonkululeko Gobodo spoke of the need to develop a framework that would open up the financial sector to black people. She urged leaders to "dissect" the current economic structure that makes black people beggars and unwelcome visitors in the sector rather than active and valued participants.

There will never be true financial equity in South Africa if discrimination continues. Politically charged de-banking is a form of discrimination which must also be challenged and eradicated. At last week’s Parliamentary session, Brian Molefe raised alarm about the duplicity of banks which close the accounts of some clients without justification, and without due accountability and transparency.

In a thought piece published in The African in January, entitled, ‘Weaponised’ Banks Complicit in Enabling Political Agendas, Dr Reneva Fourie writes about how the South African banking sector has become a central player in the political arena. She argues that the closing of bank accounts belonging to individuals and organisations is often weaponised to silence dissent against the status quo. The closure of the bank accounts of The Sekunjalo Group, which has gained international coverage, is a case in point. So too is the closure of the accounts of Duduzane Zuma, the son of former President Jacob Zuma, and the denial of a bank account to the 17-year-old son of EFF leader, Julius Malema. The duplicity is crystal clear. Dr Fourie points out, “If banks had applied their standards fairly, the President’s bank accounts should have been closed due to the Phala Phala scandal.”

No matter what our individual political leanings are, if we are truly invested in a just South Africa we must condemn any form of financial prejudice and prosecution by South Africa’s banks. It is a disservice to all who strive for true financial justice. It was over 60 years ago that Biko said “in South Africa now it is very expensive to be poor”. Today this statement remains painfully true.

(Kim Heller is a political analyst and author of ‘No White Lies: Black Politics and White Power in South Africa.’ The views expressed don't necessarily reflect those of the Sunday Independent or Independent Media)