Cape Town - Significant financial and non-financial barriers are still holding South Africa back from becoming a gateway for investors into Africa, the Minister of Finance Pravin Gordhan revealed in his Budget Speech on Wednesday.
Gordhan said the National Treasury would consult with interested parties to address blockages and would also release a new draft of its consultation paper on cross-border investment.
The Reserve Bank would also make minor changes to reduce red tape on cross-border transactions, Gordhan said in the Budget Review.
Meanwhile, Gordhan also announced progress on the proposed reforms he mooted in last year's Budget Speech to strengthen the financial regulatory system.
He said Cabinet had approved the principles and that technical work was underway on the proposals and that legislation would be released in 2013.
The legislation would propose that a new prudential regulator be posted at the Reserve Bank, the transformation of the Financial Services Boards into a market conduct regulator and the formalisation of the existing Financial Stability Oversight Committee.
He revealed in the Budget Review that four Bills would be tabled in Parliament this year. These are:
* Amendments to the banking legislation to introduce stronger Basel II capital requirements and to introduce dedicated banks, which specialise in retail activities such as deposit-taking or lending.
* The Financial Markets Bill, which would replace the Securities Services Act, strengthen the fight against market manipulation (including insider trading) and regulate over-the-counter derivatives
* The Credit Rating Services Bill which would regulate the governance and practices of credit-rating agencies.
* A general Bill to address gaps in the regulation of pension funds, insurance companies and friendly societies.
The National Treasury will also hold a number of interactions with financial services providers in the next few months to address the high fees charged for many of these products.
Addressing media before his speech in Parliament, Gordhan said government was very concerned about the costs in the financial services sector and that products were still large aimed at a first-world market, rather than at poorer customers.
He said government was also concerned about cost deductions - at times as high as 40% - which eroded the earnings an investor could generate from any investment.
