The Validity of Objections to Side-line the USA-based Community Reinvestment Legislative Model in South Africa

Abstract

This article discusses the adoption and the eventual side-lining of the Community Reinvestment (Housing) Bill (CRHB) in South Africa, which is based on the United States of America’s Community Reinvestment Act of 1977 (CRA), as a measure to prevent various patterns of redlining in South Africa. It identifies continuing allegations of redlining by financial institutions. It further questions whether the Financial Sector Charter, which was voluntarily agreed upon at the National Economic Development and Labour Council (NEDLAC), and the Financial Sector Code, are effective in preventing redlining and the impact of financial exclusion of low-income households. The article discusses several reasons and objections to side-line the CRHB by comparing the context within which the CRA was applied in the USA and the South African context within which a similar legislation will be applied. This article asks whether these objections are still valid and whether the Financial Sector Charter and the Financial Sector Code are effectively enforced to prevent redlining.