Black consumers endure racial profiling and barriers, hindering financial access. Graphic: Supplied
By Feroza Petersen
SOUTH Africa’s banking sector faces scrutiny for entrenched racial discrimination.
Apartheid’s legacy left an enduring mark, with residential segregation, redlining, biased appraisals, and algorithms denying black South Africans equal access to capital.
The result is a persistent racial wealth gap, decades post-apartheid.
Black consumers endure racial profiling and barriers, hindering financial access.
Shockingly, 18% of the population, about 11 million individuals, remain unbanked or underbanked, as per the University of Stellenbosch Business School.
The #RacistBanksMustFall movement exposes mounting black frustration, while protests in Johannesburg and Cape Town shed light on racism in banking, with Adil Nchabeleng, the movement’s convener, saying: “We’re tired of racism by banks. We’re tired of being victimised.”
The SA Reserve Bank (SARB), responsible for banking regulation, appears passive amid ongoing discriminatory bank practices.
An alarming power imbalance exists, as banks hold shares in the regulator, blurring lines and raising conflicts of interest concerns.
Rising interest rates by SARB disproportionately affect the black community, jeopardising the black middle class.
They rely heavily on credit for essentials like homes and cars, facing increased defaults and financial hardships.
South Africa’s credit scoring system worsens exclusion, as many black borrowers lack credit scores due to limited access to mainstream financial services.
SARB’s inaction threatens inclusive growth, potentially leading to job losses and increased unemployment.
In the meantime, calls for reform grow louder. Some propose a dual mandate, like the US Federal Reserve has, focusing on employment and price stability.
Holistic change is essential to dismantle systemic discrimination and exclusion.
While the Banking Association South Africa (Basa) denies discrimination, black businesses continue to struggle for financing and support.
Industry associations, including the SA National Taxi Council (Santaco) and Black Farmers Association of SA (BFASA), advocate a state-owned bank and Land Bank expansion to empower black entrepreneurs.
In a nation striving for justice, the banking sector must catch up. South Africa’s financial institutions must transcend historical biases, becoming pillars of equality.
The path ahead may be challenging, but South Africa cannot afford to lose the fight for financial justice and inclusivity.