A black business association, the Association of Black Securities and Investment Professionals, has hit back at heated criticism of the financial sector charter, saying the comments are misinformed and made by those with specific interests to advance.

The charter, which was signed in October last year, sets out a transformation plan for the sector over the next 10 years, but has attracted growing criticism over the past few weeks.

The most vitriolic attack on the charter came last week from Denel chairman Sandile Zungu, who said the charter's targets were too low, adding that "perhaps we should take (it) back to the drawing board".

But the association, which played a key role in drawing up the charter, has defended the document, saying recent criticism was based on a lack of understanding.

Kennedy Bungane, the association's president, said there were "groups with a specific interest pushing a specific agenda who fail to grasp how the charter will actually work.

"We welcome debate around the charter, but these views need to be informed and it is this element that is lacking in the debate right now," he said.

Zungu had singled out the R75bn for empowerment financing as a particular weakness of the charter, saying that with total merger and acquisition deals worth R147bn in 2003, this R75bn over a five-year period was hopelessly inadequate.

But Bungane said that view was flawed.

"Firstly, only a fraction of that R147bn related to empowerment deals; secondly, the charter targets on equity deals will not include many types of deals that use vendor finance or certain other methods, and lastly we have not yet decided whether this R75bn will be split over five years or a lesser period," he said.

Bungane also said the R75bn was a minimum level, which could be exceeded.

"The debate has moved beyond this quantum to now look at the quality of financing, so that we can tap funding from other potential sources," he said.

Various charter groups are only now working out the details of the empowerment financing targets of the charter, due to be finalised by the end of June, clarifying how this R75bn will be split.

However, only part of this R75bn will go towards empowerment as imperatives such as financing low-cost housing and spending on black small, medium and micro enterprises will also come from within that figure.

Andy Brown, who works with the association and runs an empowerment consulting firm, said the real strength of the charter would come through the way it was implemented and enforced by the charter council.

Final details of the charter council are due to be released by the end of this month.

Business Day 05 April 2004