By Ontiretse Motingwa and Nolwazi Xulu
Prof Howard Chtimira, a professor of securities and financial markets law at the North-West University’s (NWU’s) Faculty of Law, delivered his inaugural lecture on 21 October 2022 at the Mahikeng Campus.
Titled “A legal conspectus of selected challenges affecting financial inclusion for the poor and low-income earners in South Africa”, the lecture advocated for better financial inclusion strategies in South Africa.
According to Prof Chitimira, financial inclusion can be defined as the provision of affordable financial products and services to all members of society by the government and/or other relevant role-players such as financial service providers.
The lecture highlighted that government, financial institutions and other relevant stakeholders should adopt legislative and other measures as an antidote to financial exclusion and poverty challenges affecting the poor and low-income earners in South Africa.
“South Africa has made commendable progress towards the promotion of financial inclusion in South Africa since 1994. For instance, the adoption of the National Development Plan (NDP) goal to attain 90% financial inclusion in South Africa by 2030 should be welcomed as a positive commitment on the part of the government to increase financial inclusion. However, at the pace we are going about it, we are likely to miss this target,” he said.
Prof Chiitimira said the enactment of the Financial Sector Regulation Act, which obliges the Prudential Authority and the Financial Sector Conduct Authority (FSCA) to promote financial inclusion, was another positive step.
“Nevertheless, unemployment, poverty, financial illiteracy, over-indebtedness, high bank fees, mistrust of the banking system, lack of relevant national identity documentation, and a poor legislative framework for financial inclusion have remained the main challenges to the full realisation of financial inclusion in South Africa to date.
“Consequently, the government and other relevant stakeholders should consider adopting appropriate measures to combat poverty and unemployment in South Africa,” he said.
Prof Chitimira added that these proposed measures must include empowering the poor and low-income earners with well-paid jobs so that they can open bank accounts and access other formal financial services.
“It is also submitted that the FSCA and other related role-players should regularly conduct financial literacy and educational awareness programmes that are mainly aimed at promoting financial inclusion for the poor and low-income earners in all the rural areas and informal settlements of South Africa.
“This could equip and encourage financial consumers, especially the poor and low-income earners, to make well-informed financial decisions and curb over-indebtedness and financial exclusion. Moreover, South African policy makers should consider revamping the banking regulation in order to curb high bank fees, reduce mistrust of the banking sector and prevent the recurrence of the mismanagement of banks,” he said.
The lecture also proposed that policy makers should consider enacting a separate and specific statute to regulate financial inclusion with adequate provisions that discourage financial exclusion of the poor and low-income earners in South Africa.
“Banks and related financial service providers should establish more branches in rural areas and informal settlements to encourage financial inclusion of the poor and low-income earners in South Africa,” concluded Prof Chitimira.
Prof Jeffrey Mphahlele, deputy vice-chancellor for research and innovation, hands an inauguration certificate to Prof Howard Chitimira.
