Critical and scarce skills concerns in the financial services sector - and how the sector can support ASGISA and JIPSA

1. Critical and scarce skills concerns in the financial services sector - and how the sector can support ASGISA and JIPSA 13 October 2006 3rd BANKSETA International Conference 11-12/10/2006 Andrew Paterson

2. Aims • Critical and scarce skills concerns in financial services • How the sector can support - • Accelerated and Shared Growth Initiative SA and • Joint Initiative on Priority Skills Acquisition • International referencing • Financial services convergence and • Comparative international skills patterns and flows

3. Critical skills and generic skills • Shift from a product driven industry to a customer driven industry • Workers with more wholistic skills sets(incl. generic and technical) • Industry focus on securing highly qualified workers to ensure core accreditation skills in place - ad-hoc approach to other skills development needs • Strongest demand is for generic skills: “Yet development of these skills may be left to the individual whiles the industry focuses on its accreditation and regulatory needs” • Need to ‘update’ the accreditation system to include broad based competence

4. Financial sector convergence • Regulation and supervision – • SA Activities overall restrictiveness 10 on a scale of 5-20, same as average for high income countries. (lower middle =13) (/55 countries) • Global technological - convergence newdelivery channels • Distintermediation of delivery channels – non-traditional competition • Clients – increased expectations • Narrower margins &more emphasis on earning from fee-based activities • Raises definition of what is a banking productwhere similar financial products are offered in different financial services industries

5. Enterprise positioning and market strategy

8. ASGISA and JIPSA

9. ASGISA • Accelerated and Shared Growth Initiative of South Africa (ASGISA) • Initiatives to promote accelerated and shared economic growth and labour absorbtion with the long term aim of addressing the fundamentals for sustainable growth and development. • Heart of ASGISA - R372bn infrastructure development programme which will require particular skills. MTEF planning. • Wide implications across entire economy, but targeted sectors have been targeted - tourism, business process outsourcing (BPO), and biofuels. • Other sectors targeted in the medium term include: creative industries, mineral beneficiation, chemicals, agriculture and forestry

10. The centrality of the financial system • Prior to 1990s, view was that economic growth lead financial sector growth which responded to demand • Recent research has focused on the possible causal connection between the development of the financial system and overall economic development (Barth Caprio Nolle, 2004) • Industries more dependent on external financing tend to grow faster in countries with a higher level of financial system development (Rajan and Zingales,1998) • Key indicators SA banks lower middle income economy (55 countries), • Concentration - bank assets foreign owned 5% (rank 43), government owned 0% (51) • Competition - bank assets in top three banks 57%(22 mid); Net interest margin as a % total assets 2.93(32) (interest rates charged against own interest expenses) • Concentrated banking markets > less lending at higher costs to borrowers especially smaller firms > negative effect on economic growth

11. ASGISA – opportunities for finance sector support • Attention to legacy of a fragmented spatial economy & constraints on job creation and growth prospects of small enterprises, informal traders and emerging farmers • Stepped up investment in the residential and local built environment prioritised (housing, community services, water and electricity) • Broadening of economic participation: • Expanded public works programme - labour intensive methods - many areas of infrastructure maintenance and public service delivery • Community investment aimed at accelerated delivery & consolidating local development initiatives • Strengthening of public health care and education such as: • Upgrading and revitalising hospitals, equipment and ICT • School building and facilities • Investment in facilities and equipment for the FET colleges recapitalisation

12. JIPSA • To address the question of constraints and inefficiencies in the existing legislative and regulatory frameworks and institutional arrangements for the delivery of skills. • Immediate short term deliverables • Intermediate skills for infrastructure development • ICT strategy • Unemployed graduates • JIPSA has been directed to focus on five priority skills areas: • engineering and planning skills for the ‘network industries’, • city and urban and regional planning & engineering • artisanal and technical skills - infrastructure development, • management and planning in education and health • mathematics, science, ICT and language competence in public schooling

13. Considerations • SETA coordination for financial sector • Critical skills - NB • Scarce skills – less NB • Financial services ASGISA and JIPSA • Service providers skilling sector human resources • Targeted industry support for economic development

14. Thank you