By: Noxolo Majavu
SMMEs can expect to see some improvement and more inclusion in the financial sector following the Financial Sector Conduct Authority (FSCA) committing to holding training workshops for smaller businesses and entrepreneurs in the sector. They will focus on issues of compliance, readiness for licensing, and understanding regulatory processes. This forms part of a recent memorandum of understanding (MOU) between the institution and the Broad-Based Black Economic Empowerment (B-BBEE) Commission.
It was signed last month to strengthen the relationship between the commission and FSCA after the commission raised concerns over the inadequate submission of B-BBEE compliance reports by the financial sector. Although the MOU did not explicitly make provisions for SMMEs, it did establish a framework that indirectly affected them through its focus on broader financial sector transformation and compliance within the B-BBEE framework, FSCA spokesperson, Nomthandazo Baloyi told Vutivi News. “The FSCA regulatory framework is designed to be risk-based and proportional, meaning that our regulatory requirements are tailored according to the size and risk level of regulated entities.
For SMMEs in the financial sector, this means they are subject to less stringent requirements compared to larger entities,” Baloyi said. The MOU further strengthens the relationship on issues of common interest, cooperation, collaboration, assistance and the exchange of information. While in some ways it was already operational as the two bodies were cooperating on matters of common interest relating to the transformation of the sector, Baloyi pointed out that the FSCA’s financial inclusion strategy considered how to improve access to financial services for smaller businesses.
“SMEs are a historically underserved market in South Africa. The work of other stakeholders involved in small business development is important in this regard, and the FSCA aims to ensure cooperation and collaboration with such stakeholders so that efforts have maximum effect,” he said. The partnership aims to bring attention to the gaps that exist in the collection of data on the implementation of B-BBEE in the financial sector.
In a previous statement, B-BBEE commissioner Tshediso Matona said that the transformation of the financial sector was imperative to realising the objectives of the B-BBEE Act. “… the B-BBEE Commission is excited about the partnership with the FSCA in pursuit of this common goal. “Funding and financial support are the bedrock of any thriving economy and are key to the success of economic empowerment, enterprise development, and reduction of unemployment, poverty, and inequality, which is the reason the Financial Sector Code contains a special provision for funding black entities,” he said. Matona went on to say that measures and mechanisms to monitor the application of the code would be made easier through the MOU, but also through the objectives of the transformation strategy of the FSCA.
