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BANKS NOT FOR THE POOR

23/03/2014 09:15:00 By Jan Sthole

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I get really confused when banks say they exist to help bankable people. Who are these bankable people? What makes them bankable?

If there are bankable people, one can infer that there must be ‘unbankable’ people and I would ask the same question: who are these unbankable people and what makes them unbankable?
This smacks of prejudice to me and I hate the sound of it already.
I can smell prejudice ten miles away.

If banks exist to help the elite and the well-heeled they must come out in the open and declare it, however shameful their confession may be. It serves no purpose to hide these facts because hiding can mislead government into thinking nothing needs to be done in terms of intervention on behalf of the poor or the so-called ‘unbankable’.
If poor people are clandestinely being ostracised by banks as is evident, this should prompt government into thinking about issuing a banking licence to any investor who would put up a ‘people’s bank’ for the less well-heeled which can be regulated like the other banks.

The proliferation of unregulated shylocks in the market is an indictment of the failure by banks to offer banking services to everyone, regardless of how deep or shallow these people’s pockets are.
Shylocks have timeously stepped in exactly where banks have dismally failed.
Most of these shylocks are unfortunately not regulated and are a law unto themselves.

Instead of providing a much needed service in the market they end up putting the so-called unbankable people into a vicious cycle of poverty through their extremely high interest charges.
Our Minister of Finance Martin Dlamini was an illustrious governor of the Central Bank until recently and I am still wondering how the matter of shylocks got to escape a brilliant mind like his.
However, I hope Majozi, who has somewhat impressed me in his first few months as central bank governor by taking a stand against hiking interest rates which South Africa did recently, will take up the matter of unregulated shylocks as a matter of urgency.

As he addresses the problem, he should at the same time call the banks to order by scrutinising their policies when it comes to providing services to the poor.
On this score, he should not rely on banks’ marketing pamphlets which all too often wrongly purport to cater for small indigenous businesses and the local ‘Joe’ in the street.
There is nothing that could be further from the truth because, if truth be told, a bank is not a poor man’s place to be.
It seems, and I stand corrected here, that bank policies were designed to kick out anybody who remotely looks like he is not rich.
Yet bank pamphlets brag that everyone is welcome in those banking halls.

If one takes a walk in the villages, there are so many young people with good business ideas, which in my considered opinion are bankable.
These young people do not wear fancy suits or tunics and do not have collateral they are rejected outright even before they submit their loan requests.
Some of them end up in the street as struggling hawkers with their unfulfilled good businesses ideas in their heads.

Others end up dead in frustration, taking with them their good business ideas to the grave. I think it is Myles Munroe, the motivational speaker and author, who once said the richest place on the planet, was the grave.
The man was right because the grave is full of people, young and old, with unfulfilled dreams.
I would argue that a good portion of them was because they were rejected by banks. I know that banks are supposed to chase after profits which they do extremely well especially in this country.

Obligations

I think they should do more than that.
As they chase profits, they should not forget their moral obligations to the society they serve, especially the poor.
They should not forget that the rich people who they aggressively chase after while frothing in the mouth were once very poor too.

However, they made it because some bank, that is when banks were still real banks, invested in them in order to realise their business dreams.
To escape the cycle of poverty in our midst, which refuses to go away, banks must take their place and do what they were originally intended to do, fairly and without prejudicial behaviour.
If banks refuse to come to the party because they feel serving the poor cramps their lifestyle, I think this government can intervene by varying upwards the corporate tax applicable to banking corporate profits.

Some countries already have a special tax rate for banking institutions because most of them make supernormal profits anyway, yet they produce nothing tangible as compared to manufacturing. It does not have to be like that.
If push comes to shove, I trust Majozi Sithole will immediately ‘think outside the box’ so that we can take the tax windfall from the banking sector to start a fund for ‘unbankable’ small businesses and individuals.
I know banks will claim they do not make enough profits already and any punitive tax on them will be unfair.

The truth of the matter is that banks will never make enough profits because to them, enough is never ever going to be enough.
They keep stretching their expectations for profit, completely forgetting that they, too, are part of a society in which they have a stake and a role to play.
Profit is good but it is bad when it is achieved as a result of ignoring one’s obligations to society.
Then we have the problem of bank charges which have become a matter of grave concern to everyone.
These charges are shooting so high that people need to take on extra jobs to cater for them.

If the average bank charges incurred per month by an average customer is almost equivalent to the average monthly wage for a lowly-paid individual, you know there is a serious problem somewhere.
This alone tells me that if you are poor, your banking interests are best served by staying as far away as possible from the nearest bank.
This problem is what drives the poor straight into the unloving arms of the shylock who is never hard to find and whose ‘banking hall’ is only a weather-beaten briefcase which bears the scars from many broken legs of defaulting customers.

The bankers’ association must have a serious conversation among itself on how it can contribute to the prosperity of this country.
However, I will not cross my fingers.
Profits always follow those institutions, which are responsible corporate citizens and who are fair to their customers and employees.
By corporate citizenship, I do not mean these donations we always see banks making by holding big handwritten ‘unbankable’ cheques and smiling for the cameras. We all know those are not donations as such but marketing gimmicks.
If banks want to make a real donation, which the nation will appreciate, they should serve the interests of the poor and cut their tariffs.
The rest can then follow.

Until then, I would challenge two men to take up this matter:
These are the minister of Finance and the Governor of the Central Bank.
These two men should apply their minds and they must intervene because, in essence, this economy will languish until financial institutions play their rightful roles as a sector.

At the moment, they leave a lot to be desired to say the least.
Lastly, I must say there are one or two banks that are really trying hard to live up to our expectations but I would not want to mention them, lest they stop trying.