Delegation

1. Responses to PCC public hearing submissions on South African Postbank Bill, [B14-2010]Mamodupi Mohlala: Director General 13 April 2010PCC Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

2. Delegation • Mamodupi Mohlala : Director General • Gift Buthelezi : Acting DDG • Mlindi Kgamedi : Chief Director • Willie Vukela : Director • Alf Wiltz : Director • Lerato Molete : Director • Manthekeleng Monama : Director Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

3. Outline • Background : DG • Objective : DG • Response to submission by COSATU : A Wiltz • Response to submission by SAPO : W Vukela • Response to submission by ICASA : W Vukela • Response to submission by NT : W Vukela • Response to submission by ECYDB : L Molete • Response to submission by PCC : G Buthelezi • Conclusion : W Vukela Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

4. Background • The PCC held its first public hearings on the South African Postbank Bill on 23 March 2010 • In addition to verbal presentations, written submissions were also submitted to the committee • The following stakeholders made their presentations and submissions on the Bill: ICASA, COSATU, ECYDB, SAPO and National Treasury Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

5. Objective • Aim of the presentation is to respond and comment on the submissions and issues raised by stakeholders during the hearings and also on the written submissions to the Committee Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

6. Response to submissions by COSATU Corporatisation and Privatisation • COSATU emphasised the corporatisation and eventual privatization of the Postbank which they are not supporting Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

7. Response to submissions by COSATU Department’s Response • No intention to privatize the Postbank. Privatization means the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector (government) to the private sector ("business"). In a broader sense, privatization refers to transfer of any government function to the private sector - including governmental functions. • In contrast, this Bill only seeks to corporatise the Postbank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

8. Response to submissions by COSATU • Clause 9(1)(b) that enables the Postbank to sell assets required in ordinary course of business. COSATU notes that clause 3(5) of SAPO Bill enables the Minister to sell 49% of a subsidiary of SAPO • Corporatisation refers to the transformation of state assets or agencies into state owned corporations in order to introduce corporate management techniques to their administration Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

9. Response to submissions by COSATU • The Postbank however, will have a dedicated enabling statute that provides in clause 3 that SAPO is the sole shareholder. Legislative amendment is therefore first required, that protects the Postbank. • Developmental mandate remains with no impact on job security Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

10. Response to submissions by COSATU Lack of consultation • COSATU further submitted that CWU was not consulted on the Bill. Department’s response • Information regarding the proof of consultations with CWU has since been sent to COSATU. The relevant proof of consultation is attached to the presentation Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

11. Response to submissions by COSATU • The information included a letter sent to the General Secretary of CWU and an attendance register signed by members of CWU in some of the workshops • A comprehensive list of all stakeholders consulted can be found on page 16 of the Bill in the Memorandum on the Objects Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

12. Response to submissions by COSATU Collective bargaining required • COSATU believes that the Bill should have been subjected to collective bargaining Department’s response • In public hearings COSATU indicated that they never emphasized for the Bills to go through NEDLAC but would have preferred if the Bill was considered by NEDLAC Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

13. Response to submissions by COSATU Objects of the Bill • COSATU proposed a number of additional objects Department’s response • Department agrees with the following objects proposed by COSATU • To promote universal & affordable access to banking services • To address historical disparities in access and distribution of services, especially in the rural areas • To expand the range of banking services accessible to poor people & communities Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

14. Response to submissions by COSATU Conditions of employment • It was argued that less favourable employment conditions/different sets of employment conditions will be created Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

15. Response to submissions by COSATU Department’s response • No former Postbank employee whether he/she becomes Postbank employee or SAPO employee seconded to the Postbank, will have less favourable conditions than before the transfer date. • The protection of former Postbank employees that elect to remain SAPO employees and to be seconded to the Postbank, is provided for in the SAPO Bill. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

16. Response to submissions by COSATU Removal of schedule 1 • It was further submitted that Schedule 1 be removed to leave employment conditions to collective bargaining Department’s response • Schedule 1 is necessary to protect rights of employees and ensure a transfer without prejudice to employees. The further or ‘new’ determination of conditions of service as contemplated under clause 20(2) remains subject to collective bargaining. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

17. Response to submissions by COSATU Public consultation on Memorandum and Articles of Association (M&A) • It was further submitted that there should be public consultation with regards to M&A Department’s response • Ordinarily, it is the shareholder that determines the memorandum and articles of association (M&A) • The Bill goes further by contemplating a role for the Minister in this regard to strengthen governance Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

18. Response to submissions by COSATU • M&A must be developed in line with the framework in the Companies Act and in accordance with the PFMA and Postbank statutes • It would be very unusual to allow public consultation on an M&A that effectively deals with operational matters of the Postbank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

19. Response to submissions by COSATU Board representation • COSATU further submitted that the Board should be representative of labour and civil society Department’s response • Provision is made for suitable qualifications, expertise and experience and that the Board be representative of a broad cross-section of the population • No provision is made for representation by any specific sector Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

20. Response to submissions by COSATU • It should be noted that section 60 of the Banks Act specifies certain requirements in respect of Directors of Banks Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

21. Response to submissions by SAPO • The following submissions were made by SAPO on the Postbank Bill: Section 12 (3) (b) • It is submitted that section 12 (3) (b) should be amended to refer only to Non-Executive members, that they “must” as opposed to “may” be re-appointed and that the Minister must have the power to extend the term beyond five years Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

22. Response to submissions by SAPO Department’s response • The term “members” must be used for consistency with rest of the clause as well as clauses 13-17 that all refer to “members” • The term “may be reappointed” is preferred over “must be reappointed” to allow discretion • In the interest of openness and transparency it is suggested the term of reappointment rather be fixed in the Bill Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

23. Response to submissions by SAPO Section 28 and Schedule 2 • SAPO contents that the repeal of section 51 (1), (2), (3) and (4) of the Postal Services Act 124 of 1998 creates a problem and will prevent the continued operation on the Postbank prior to being granted a banking license Department’s response: • It is the Department’s believe that Section 28 of the Bill dealing with transitional provision covers the transitional period between the commencement of the Bill and issuing of license under that Banks Act Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

24. Response to submissions by ICASA • As noted by the Committee, ICASA’s presentation was based on the old version of the Bill • Most of their submissions were addressed by the current version of the Bill • It was however noted and indicated that some of their submissions were valid and should be re-worked in line with the current version of the Bill Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

25. Response to submissions by ICASA Repeal of sections 47-50 of the Postal Services Act • ICASA proposed the repeal of the above sections Department’s response • These provisions are money transfer services that remain within the SAPO domain. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

26. Response to submissions by ICASA Term of Board • ICASA proposed that “The members of the Board will be appointed for such period, not exceeding five years or such lesser period as the Minister may determine” Department’s response • The current provision in clause 12 (3) (a) is already in line with their proposal. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

27. Response to submissions by National Treasury • National Treasury emphasised that the Bill is as a result of the inter-departmental Committee (DOC, National Treasury, Reserve Bank and SAPO/Postbank) • Emphasised the need to corporatize the Postbank and have it regulated and supervised under the financial sector regulations Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

28. Response to submissions by National Treasury • Important to note is that they fully support the Bill as it is as a result of the deliberations and outcome of the inter-departmental committee and part of finalising the Postbank corporatisation process that started some years back • No amendments to specific provision of the Bill was proposed by National Treasury Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

29. Response to submissions by ECYDB • Developmental role of the Postbank • As noted presentation made by the ECYDB was mostly based on the role that the Postbank should play in the development of communities, especially the rural communities and not on the content of the Bill • Department’s response • Department is of the view that the additional objects proposed by COSATU will address the development requirement Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

30. Response to submissions by ECYDB • Service delivery challenges • The following were identified as challenges with regard to the Postbank: Long queues, few staff, not enough security, Postbank closing early and distance to the Post Offices • Department’s response • Long queues: should be resolved through the dedicated counters to service Postbank clients • Distance to Post Office: in terms of the service delivery standards people are not suppose to walk more than 5km radius Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

31. Response to submissions by ECYDB • Department is of the view that service delivery will generally improve as a result of the corporatisation, a dedicated Board as well the financial sector requirements that will become applicable to the Postbank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

32. Response to submissions by ECYDB • ECYDB’s recommendations • Building of ATMs, introduction of pin code cards, mobile banks, road shows, improve security, build network with other commercial banks and provide for minimum rates and charges • Department’s response • Most of the ECYDB’s proposals are operational in nature and cannot be captured in the Bill Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

33. Response to submissions by ECYDB • It is however important to note that the Department supports the submissions and will work closely with the Postbank to ensure that the recommendations are implemented • Department agrees that the rates and charges of the Postbank must take into consideration the needs of the customer base that is being targeted including the rural and lower income market as well as communities that have little or no access to commercial banking services or facilities Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

34. Response to submissions by Members of the Committee • Objects as contemplated in the White Paper • Bill not incorporating White Paper issues which had been raised to transform the country’s postal service • Department’s response • Aim is still to move to a fully fledged savings bank through a phased approach as contemplated in paragraph 9.10 of the White Paper Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

35. Response to submissions by Members of the Committee • Currently a subsidiary/autonomous company as envisaged in phases II and III is created • The Bill also states that one of the objects is to provide services to communities with little or no access and become a bank of first choice • As contemplated, lending facilities will for example, become available once registered as a bank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

36. Response to submissions by Members of the Committee • Although the policy thinking has been revised through this Bill where necessary since it is 12 years old, the general purport of the White Paper remains • The additional objects proposed by COSATU as well as rates & charges taking the rural and lower income market into consideration, brings the Bill in line with the White Paper objectives Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

37. Response to submissions by Members of the Committee • Appointment of the Board by the Minister • It was argued that the Bill gives too much powers to the Minister in the appointment of the Board • Department’s response • The role envisaged for the Minister in the appointment of Board members includes public processes through invitations in the media and the role of a representative nomination committee. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

38. Response to submissions by Members of the Committee • In the absence of any constitutional requirement for independence as is the case with the SABC and ICASA, the role envisaged for the Minister is accepted practice in respect of SOEs Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

39. Response to submissions by Members of the Committee • Notice in two national newspapers • Publications in two national newspapers do not reach communities at large • Department response • TheDepartment agrees that communities and ordinary people should also have access to such notices • Principles of consultation in the PAJA regulations state as follows (though in respect of a public enquiry): Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

40. Response to submissions by Members of the Committee • “An administrator must give notice of a public inquiry, if the administrative action affects the rights of the public throughout the Republic, in the Government Gazette and a newspaper which is distributed, or in newspapers which collectively are distributed, throughout the Republic.” • Costs should be taken in to consideration but any improvement of current wording is welcomed • It is proposed that community radio and other relevant community fora be added in order to reach communities at large Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

41. Conclusion • The Department wishes to thank the Committee for the opportunity to respond to the submissions received during the PCC public hearings • The Department will gladly provide any further clarity or assistance required Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

42. THANK YOU Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development