Chief Reporter

THE DEADLOCK over outstanding finance charter targets has been broken, and banks, life assurers and pension funds are set to commit R122,5bn over five years to funding black empowerment in SA.

If accepted at the first charter council meeting next week, finance companies will be ploughing 60% more money into financing empowerment than the R75bn earmarked when the charter was signed a year ago.

This will also be the largest single investment in empowerment finance, eclipsing the R100bn committed by mining companies under the mining charter and the R10bn set aside by government.

They also provide the first breakdown of how the money will be spent. Of this R122,5bn, R50bn has been earmarked as a "reference point" for funding black empowerment deals, suggesting this could grow.

The remaining R72,5bn will be split four ways R42bn to provide financing for low-cost housing, R25bn to finance infrastructure projects such as bridges in rural areas, R4,1bn for small black business and R1,4bn for financing black agriculture.

These targets all exceed government spending in these areas.

The R42bn for low-cost housing to which government is expected to contribute is double the R20bn proposed earlier.

But the 21-member charter council includes some of the charter's staunchest critics, among them the Congress of South African Trade Unions and the South African Communist Party.

It remains to be seen whether they will support the proposal.

The charter was launched a year ago, and the financing targets were supposed to have been finalised by June this year.

This was delayed as the Banking Council, representing SA's banks, locked horns with black business group the Association of Black Securities and Investment Professionals , which wanted higher targets in certain areas.

The South African Insurance Association said this week that "the industry and (the association of black industry professionals) have reached consensus on empowerment financing targets, to be presented to the charter council".

The association's president, Kennedy Bungane, would not confirm the figures, but said "we regard these new targets as a significant victory for black business".

"We have fought hard for this, and these targets show the sector has committed to ... helping the homeless, black small business owners and black farmers," he said.

The Life Offices Association said yesterday that should these targets be accepted by the council "this would represent a huge commitment and a step forward in putting the outstanding issues of the charter to bed".

"The targets pose a significant stretch, but we believe that they are sustainable ," it said.

Nedcor executive Derek Muller, who represented the Banking Council in the talks, said business wanted the targets finalised in the next few weeks.

" All the institutions have been making assumptions around what the targets are expected to be, which has created tremendous uncertainty for institutions that want to (finalise) their empowerment strategies," he said.

Financial companies will be expected to provide a portion of the R122,5bn according to market share of investable assets. Meeting their targets will earn them points on the charter scorecard, which will be used in deciding which companies qualify for government business.