Business Parliamentary Office
An initiative of the South African Chamber of Business
Representing chambers of Commerce and Industry
&
Business Unity
SUBMISSION TO PUBLIC HEARINGS
Cooperative
Banks Bill (2007)
Portfolio Committee on Finance
Parliament of the
Tuesday,
28th August 2007
1.
INTRODUCTION
The Business
Parliamentary Office (an initiative of the South African Chamber of Business)
whose organised business constituency members include the Chambers of Commerce
and Industry South Africa (CHAMSA) and Business Unity South Africa (BUSA),
thanks Parliament’s Portfolio Committee on Finance for the opportunity to make
a submission on the Cooperative Banks Bill (2007).
We welcome
the introduction of the Bill as a further progressive step ensuring the
continuous improvement of access to a variety of viable banking products and
services for the South African nation. Also to appropriately regulate what is
currently an unregulated activity.
2.
CONSIDERATION
OF THE BILL
The Cooperative
Banks Bill (2007) progressively builds on the existing suite of measures, by
government to ensure the creation of an enabling and supportive legislative
environment for a vibrant cooperative movement.
Access to
sustainable cooperative financial services is an important consideration, in
order to fully realise the socio-economic benefits that such a cooperative
movement can play in our national development.
3.
VARIOUS
ASPECTS AND DIMENSIONS OF THE BILL
3.1 Institutional and administrative
governance
The
provisions for sound institutional governance and administrative accountability
are important features captured in the Bill. While cooperative development is
based on amongst other things, self-sufficiency, its sustainability must be
entrenched through good governance and accountability to protect the interests
of those it serves.
Pertinent in
this regard, are the legislative instruments, institutional arrangements,
governance criteria, administrative arrangements and compliance measures
detailed in the Bill to ensure protection of member interests and sound
supervision of the cooperative banking system.
We urge that
these are further extended when the regulations to the Bill are developed and
published. These regulations should appropriately capture the investment
criteria for cooperative banking establishments. Business trusts that these
regulations will not in any way dilute, but rather build on what is already
provided for in the Bill.
3.2 Increasing access to autonomous
financial services
The
licensing, governance and administration processes envisaged by the Bill, aimed
at increasing access to autonomous cooperative banking and financial services,
should be pursued in such a manner that supports the broader national agenda of
improving:
·
Access to finance;
·
Personal savings and investment;
·
Broad-based black economic
development;
·
Job creation; and
·
The
diversity of possible cooperative banking types provided for the Bill augurs
well in this regard.
3.3 Progressive build-up vs. Rapid uptake
Business is
in favour of legislation resulting in a steady build-up in the organic growth
of cooperative banking establishments, as opposed to a rapid wholesale uptake.
This is not to suggest that business does not recognise the potentially
valuable contribution of cooperative banking to socio-economic development in
Such organic
growth would assist government with the practical challenges of implementing
the legislation and monitoring compliance, through a well-balanced spectrum of
cooperative banks brought into being under the enactment of this legislation.
This would also assist in reviewing the legislation to bring about further
desired improvements and ultimately serve of the system in the best way
possible.
Here we
would like to refer the committee to the 2006 World Bank publication “Making Finance Work for
The
publication also notes the positive example of
Notwithstanding
the distinct needs and challenges facing cooperative banking in
Recognizing
the trajectory envisaged for the South African cooperative movement as a result
of this Bill, the promotion of such linkages would assist in cultivating the
exchange of information and collaboration among cooperative banking formations
in
1.
CONCLUSION
Business
wishes to commend the extensive manner in which this Bill has been consulted
among key constituencies and stakeholders. This includes within government
structures, and since December 2004 through to February 2005, with Nedlac
constituencies and the financial services industry. We therefore welcome the
introduction of the Cooperative Banks Bill (2007).
Should there
be any specific and detailed enquiries emanating from this submission, the
Business Parliamentary Office is more than happy to act as a conduit to facilitate
interaction between the Committee and relevant experts among our key
constituency members, who are well-placed to provide more detailed and specific
technical commentary on the Bill.