Abstract
M.Comm.
The Financial Sector Charter is a transformation charter in terms of the Broad-based
Black Economic Empowerment (BBBEE) Act (Act 53 of 2003). The Charter is a
voluntary initiative by the financial sector to address racially based income and social
inequalities in South Africa. It aims to encourage black economic participation
through its six pillars.
The Charter came into effect in January 2004 as a result of the Financial Sector
Summit hosted by the National Economic Development and Labour Council
(NEDLAC), the multilateral social dialogue forum on social, economic and labour
policy. The Nedlac partners – government, business, labour and community
constituencies – negotiated the Financial Sector Summit Agreements on
transforming the financial sector and signed the Summit declaration on 20 August
2002.
The Charter commits its participants to 'actively promoting a transformed, vibrant,
and globally competitive financial sector that reflects the demographics of South
Africa, and contributes to the establishment of an equitable society by effectively
providing accessible financial services to black people and by directing investment
into targeted sectors of the economy.
Financial institutions affected by the Charter include banks, long-term insurers, shortterm
insurers, re-insurers, collective investment schemes, investment managers,
retirement funds, and licensed exchanges. Any other institution in the financial sector
may opt to participate in the Charter.
The objectives of the Charter are to:
• constitute a framework and establish the principles upon which BEE will be
implemented in the financial sector;
• provide the basis for the sector’s engagement with other stakeholders;
• establish targets and unquantified responsibilities in respect of each principle;
• outline processes for implementing the charter and mechanisms to monitor
and report on progress.
Progress on the Financial Sector Charter Scorecard in the South African Banking Sector
In pursuit of these objectives, the Charter commits financial institutions in the sector
to transforming in the areas of:
• Human resource development;
• Procurement of goods and services;
• Access to financial services;
• Empowerment financing;
• Ownership and control;
• Corporate social investment.
The study provides an overview on the above objectives of the Charter and seeks to
measure and assesses in detail the progress of the banking sector regarding the six
key areas of the FSC as outlined in the FSC Scorecard against the set targets of
2008. The scorecards analysed would be those that have been submitted to the
Council as at the 31 December 2006.
• Amalgamated Banks of South Africa (Absa Group);
• FirstRand Group (including First National Bank);
• Nedbank Group;
• Standard Bank Group.
The study will assess the performance of each bank, highlighting the positives and
providing recommendations where there are shortfalls. The results will be
consolidated to give an overall performance overview of the banking sector in South
Africa in meeting transformational challenges faced by the country.
According to the South African Reserve Bank (2008:106) the financial services
sector including insurance, real estate and business services added 22% to the
Gross Domestic Product (GDP) in 2007 making it the biggest contributor. It is
therefore imperative for this study to be undertaken to assess and ensure that the
sector commits to the process of transformation in addressing the past imbalances
with regard to inclusive participation by all in the South African economy.