INTERNATIONAL FINANCIAL SECTOR WORKSHOP: BY THE OVERALL BUSINESS CONVENOR, RAYMOND PARSONS

On 5-6 April, Nedlac hosted eleven foreign experts, and about forty local delegates for two days of intensive discussions on the restructuring of financial sectors. The workshop was held in preparation for the Financial Sector Summit, which is to be held at the end of May.

The workshop was kept intentionally small, so as to be able to extract the best benefit from the interactions with the local and foreign delegates.

The topics for discussion were divided into the following broad areas: Third tier banking sector, SMME's and capital markets and investments, savings and oversight mechanisms.

In a hard-hitting paper, Gerald Epstein, Professor of Economics and Co-director of Political Economy Research Institute at the University of Massachusetts, Amherst, argued that the Reserve Bank's policy of inflation targeting should be scrapped, as it has not had great success in generating employment growth or investment. He also argued that rather than loosening the exchange control system, the Reserve Bank and Ministry of Finance should enforce the controls more strictly. His third suggested reform was that the government should implement policies and institutions, such as special lending windows, underwriting facilities, asset based reserve requirements and subsidized credit, to insulate the South African financial markets from the international capital markets and channel credit to employment generating and socially productive activities. He argued that "useful" foreign finance lags economic development and political and social stability, rather than leading it.On the panel with Gerald Epstein was Jens Reinke, Senior Researcher at the Centre for Research into Economics and Finance in Southern Africa at the London School of Economics; specializing in balance of payments issues; foreign direct investment; microfinance, specifically financial regulation, linkages with the commercial banking sector and financial sustainability.

Robert Pollin, Professor of Economics and Co-director of Political Economy Research Institute at the University of Massachusetts-Amherst, gave a paper on the behaviour of saving rates, and implications of saving rate trends for growth, interest rates and lending. He also looked at credit allocation policies and economic development in South Africa and other developing countries.

J D Von Pischke, President of Frontier Finance International Inc, which provides financial management and consulting services for small and microenterprise credit activities, focused on household savings and financial sector development, asking questions such as what incentives could stimulate savings, and what the barriers to savings were.

Speakers on the third tier banking panel included Arthur Arnold, of the Netherlands, who is CEO of the World Council of Credit Unions Inc., and who specialises in financial management, financial co-operatives and access to financial services for the poor; Henry Jackelen, the Deputy Resident Representative of the United Nations Development Programme in Brazil, who has experience in enterprise and financial sector development, as well as microfinance in developing countries; Carlos Salas Páez, a labour and micro finance economist from the Department of Sociology, Metropolitan Autonomous University, Mexico, and Paul Murgatroyd, World Bank Lead Specialist for Finance in the Africa Region, specializing in financial sector policy, banking system issues and bank restructuring, development banking and rural and SME finance.

Local speakers included Jenny Hoffman, CEO of South Africa's TEBA bank,Sizwe Tati, CEO of Khula Enterprise Finance and Gill Marcus, Deputy Reserve Bank Governor. Betty Wilkinson, United States; Associate Director, Centre for Institutional Reform and the Informal Sector (IRIS); who has worked in numerous developing countries, including Zambia, Bahrain, Nepal, Tajikistan and Papua New Guinea, gave an interesting perspective on SMME development.

The workshop was part-funded by Nathan Associates, through USAID.