The financial services sector has done such a good job of transforming itself, that its targets may well be toughened up. That's not the only change coming for the industry - its charter is also likely to be adjusted to bring it inline with the broad-based black economic empowerment codes.
Financial services was the second industry to get its own charter, following the mining industry, in 2003. Unlike mining, it was done voluntarily, and set the industry a range of targets both in its racial make-up and in the type of financing that it does. Financial services will now adjust some of the charter to bring it into line with the codes. But the charter will still provide additional goals, particularly around targeted financing.
A review of the charter is on the cards, says charter council chairman Enoch Godongwana. "The codes allow for industry-specific issues to be given space," he says. "We will have to engage on these issues." The charter, for example, makes no stand-alone provision for enterprise development, which is an important measure in the codes.
The charter has set a range of interim targets for next year, and final targets for 2014. But a review of the sector in 2005, published last year, revealed good performance in a number of areas. According to Godongwana, for example, black directors made up 30% of the industry, while the 2008 target is 33%. The 4% target for black women directors had already been exceeded by a percentage point. That has encouraged a lobby within the charter council to increase the targets during next year's review.
After the extensive negotiations that went into developing the charter, the prospect of moving targets should concern the industry. But, most seem sanguine. "What we are obviously not keen to do is see dramatic rewrites for our charter, because it was written specifically for our industry," says Standard Bank CEO Jacko Maree, who led industry negotiations during the formation of the charter. "We always expected that there would be a revision. I think to have the goal posts move is fine, provided they don't move it to the unattainable."
During the negotiating process, targets for employment equity and empowerment financing were difficult to agree to because neither party had a good sense of how difficult they would be to reach. So, the charter provided for a revision of the targets at the end of 2008.
"Shifting the targets has been a debate from the beginning," says Andrea Brown, a consultant who worked on the drafting of the charter. "The requirement to align to the codes, which generally have higher targets, is an impetus. But change is in the nature of the charter processes. They must evolve as progress is monitored and impact assessed - particularly in a situation such as the financial sector where stakeholders such as the community and labour did not even participate in drafting."
The charter was negotiated by industry and the Association of Black Securities Investment Professionals (Absip), with government involvement. But other stakeholders like labour and community groups joined the effort only when the charter council was formed. The 2008 revision gives the space for them to make their influence felt. But, importantly, only certain targets are up for negotiation. Ownership, for instance, is not - many companies have set up elaborate empowerment schemes, the undoing of which would be disruptive.
To date, only sector-wide figures for transformation at the companies have been published by the charter council. TEC's data, however, shows some companies are performing better than others (see table on previous page). Godongwana says the council has not yet published figures for individual companies because it does not want to "name and shame" while companies are still launching their transformation efforts. But at some point the charter council will release statistics on the performance of individual companies.
