South African Press Association (Johannesburg) - August 20, 2002

In addition to the agreement, the financial sector committed itself to helping ensure housing finance for the poor and life cover on mortgages for people irrespective of their HIV status.

"As a nation we cannot exclude people who are HIV-positive from access to finance, nor can we deprive those who are incapacitated by an Aids-related illness, or their dependants, and particularly Aids orphans, of their housing," said Derek Cooper, chairman of the Standard Bank and Liberty groups, at Nedlac's financial sector summit in Pretoria.

"We therefore commit ourselves to working with government to establish a scheme in terms of which mortgage borrowers under the age of 50 would be able to purchase appropriate life cover, regardless of their HIV status," he said. Cooper was speaking on behalf of the financial sector, which comprises the banks and long- and short-term insurers.

At lunchtime a group of about 50 Aids activists protested outside the summit venue against unfair discrimination by banks, insurance companies and funeral schemes against people with the virus.

Cooper said the financial sector believed in the need for community re-investment.

"We need to work with government to find the appropriate formula for addressing the housing needs of the poor, while simultaneously maintaining the appropriate South African and international standards of sound banking practice."

The sector would also help to facilitate the participation of the new classes of deposit-taking institutions to serve the poor, as outlined in the declaration, Cooper said.

In terms of the agreement the need for savings would be enhanced, and savings facilities improved.

Finance Minister Trevor Manuel said households must save more and borrow responsibly. Household savings amounted to only 0,2 percent of GDP last year, and household debt was about 54 percent of disposable income.

He added: "People cannot be expected to save in an environment where they get virtually no interest on their meagre deposits and, in fact, their capital is diminished by unrealistic bank charges."

In the past, lower-income people had suffered an embarrassing degree of disenfranchisement regarding financial services.

"This changed somewhat with the emergence with the burgeoning micro-lending industry. Regrettably, this access has come at a pernicious price, as abo-Mashonisa condemn many of our poor people to a life of financial slavery," Manuel said.

According to the declaration, proposals would be made to regulate micro-lenders to minimise the negative effects of usurious practices. The signatories would also work towards the regulation of credit bureaux.

SA Communist Party general secretary Blade Nzimande, representing the community sector, said: "There is a saying that you are not a true black South African if you haven't been on a credit list."

To which Congress of SA Trade Unions general secretary Zwelinzima Vavi, representing labour, replied: "I'm a true black South African when it comes to the particular matter of being listed."

Vavi said mass poverty and unemployment made it harder for people to afford the financial services they needed.

"But the lack of access to basic payments, savings and credit facilities also makes it harder for them to create employment and overcome poverty."

To break this vicious cycle required the restructuring of the economy and the financial sector, he said.

Nzimande said that despite efforts since 1994 to persuade the banks to contribute to transformation, there had been a contraction of banking services to the poor and higher charges were imposed.

There had been no significant increase in the involvement of banks in the provision for low-cost housing and smaller enterprises.

Red-lining of areas where black workers lived continued, as did discrimination on the grounds of race, gender, socio-economic status and HIV/Aids.

"An ambience in which many black people are made to feel that their custom is not welcome through consumer-unfriendly policies and procedures followed in the entire financial sector."

Neither market forces, nor appeals to the goodwill of the financial sector would fundamentally alter that pattern, he said.

"A major state-led project is needed to transform the financial architecture of the country in ways that will make the sector more supportive of development-orientated growth."

Vavi said the government should play a strategic leadership role.

"It is not enough to mediate between business and labour... It would be very helpful if government were to develop a White Paper on the financial sector to guide future discussions."

Nedlac executive director Phillip Dexter said a task team would start working immediately to refine the broad principles outlined in the declaration.

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