Standard Bank Group Ltd. joint Chief Executive Officer Sim Tshabalala warned that persistent racial inequality and racism were a risk to South Africa’s stability and, ultimately, its economic growth.
The country’s competitiveness is “badly eroded by incomplete transformation and by racism,” Tshabalala said in a message to staff at Africa’s largest bank by assets, published by the Johannesburg-based Rand Daily Mail Internet news site Tuesday, the contents of which were confirmed by the lender. Transformation is a term used in South Africa to refer to creating social and economic equality after centuries of colonial rule and apartheid.
Tshabalala’s comments come just over a week after Standard Bank suspended Chris Hart, an investment strategist, for tweeting that the victims of apartheid are “increasing along with a sense of entitlement and hatred towards minorities.” The lender said the comments had “racist undertones” and Hart later apologized, saying that he didn’t intend to cause offense and that his tweet was meant to be read in the context of a slowing economy.
In recent weeks, there has also been a public outcry over a white woman describing black beach-goers on social media as monkeys, a white TV talent show judge got fired after saying the incident was a free-speech issue, and a white TV presenter was suspended after ridiculing how a black government minister pronounced the word “epitome.” A black provincial government employee was suspended for saying all whites were racists and “we should act as Hitler did to the Jews.”
“What the last few days have taught us, I believe, is that we now need a new phase of open and serious dialog about race and racism in South Africa,” Tshabalala said. “Speaking as a banker, therefore, we need this dialog because a large part of our business is risk management and because country risk directly affects the cost of capital.”
While South Africa’s black middle class has grown since the end of apartheid in 1994, blacks on average still earn six times less than whites, according to the statistics agency. Government policies to promote blacks in Africa’s second-biggest economy have mostly helped a small group of people join the elite in one of the world’s most unequal countries.
“Transformation is a commercial imperative for the group,” Tshabalala said. “South Africa’s extremely high level of inequality creates grave risks to the quality of our politics, to the strength of our institutions and to the stability of our society. These worsen South Africa’s business environment and our country risk ratings which, in turn, damage our prospects for faster and more inclusive growth in South Africa and throughout the continent.”
South Africa, which holds local elections this year, narrowly avoided recession in the third quarter of 2015. The rand dropped 25 percent against the dollar last year and fell to a record 17.9169 to the greenback on Jan 11. Standard & Poor’s cut the the outlook on the country’s BBB- credit rating to negative from stable last month, indicating it may downgrade South African debt to junk. Fitch Ratings Ltd. has an equivalent rating of BBB- with a stable outlook, while Moody’s Investors Service rates the country’s debt one level higher.
~Bloomberg (Franz Wild)