Business Parliamentary Office
An initiative of the South African Chamber of Business
Representing chambers of Commerce and Industry
SUBMISSION TO PUBLIC HEARINGS
Cooperative Banks Bill (2007)
Portfolio Committee on Finance
Parliament of the
Tuesday, 28th August 2007
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
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.
would like to refer the committee to the 2006 World Bank publication “Making Finance Work for
publication also notes the positive example of
the distinct needs and challenges facing cooperative banking in
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
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.