Pretoria - Deputy Finance Minister Nhlanhla Nene said South Africa was prudent during times of plenty which helped reduce the impact of recession on its people.
"Our prudence during times of plenty has enabled government to act aggressively to stimulate the economy in a sustainable way," the deputy minister told a Banking Association Summit on Tuesday.
Nene said the recession hit South Africa when the country was preparing for the World Cup and building special infrastructure in addition to its normal infrastructure build programme.
"Together with our countercyclical fiscal policy, this helped us during those trying months. The infrastructure projects provided us with a much-needed cushion during the global downturn, and will help us emerge as a stronger and more competitive economy."
He said when Treasury tabled its budget in February for 2010/11, it had projected a fiscal deficit of 6.2 percent for the 2010/11 year which was a substantial change from the 1.7 percent surplus South Africa had in 2007/08.
"This has given the economy much needed support during very difficult global conditions, and assisted in reducing the negative impact of the global recession on our people," he said.
Nene said the country's banking industry faced challenges of its own. "One of these is to reconcile the South African first world banking sector, characterised by exceptional infrastructure and technology, with the enormous demand for financial services."
Inheriting a highly-concentrated financial sector, and financial service providers with little incentive to reduce the cost of banking services or spur innovation, the government had to act to improve access to the banking system for all South Africans.
"Our desire to broaden access to banking was not only motivated by pure altruism."
Nene said extending banking to all South Africans ensured that the allocation of capital and the developmental needs of the country were adequately matched; and ensured that the benefits of economic growth accrued to all.
"In trying to bridge the divide between the First and the Second economy, government also undertook to address South Africa's unique dilemmas."
Financial inclusion, a common thread in all policy areas, was a priority as far as providing access at reasonable costs for a wide range of financial needs and within sound and sustainable institutions.
Nene said the government recognised that including people in the formal system brought growth to communities with the commensurate consumer protection. "We recognise the financial sector as an important tool in bridging the divide and as part of the reform programme to assist on the challenges of development and poverty alleviation."
An integral part of addressing these challenges, he said, is providing appropriate savings, risk and transactional products, through technology and innovation.
