Since the end of apartheid, downtown Johannesburg has developed a split personality.
At night the streets are almost empty, abandoned by the restaurants, cinemas, and theaters that fled to suburban shopping malls to escape rising crime.
By day the once staid pavements outside the emptying office buildings and vanished department stores are far livelier than they ever were before.
The formal businesses that fled to the suburbs have been replaced by tens of thousands of street hawkers, stalls, stores, and workshops.
Now South Africa's government is hoping to harness the energy of these informal businesses by introducing US-style laws to encourage banks to lend them more money. Such businesses have transformed high-rise Johannesburg - once virtually indistinguishable from a medium size US city - into a model of bustling African street life. You can buy anything from a handful of oranges to a three-piece suit, or maybe have your engine rebored.
The country's economic growth is down to 1.2 percent, formal unemployment is running at 30 percent or higher, and the bulk of South Africa's wealth is still owned by the white minority. So the government hopes that encouraging growth in the mainly black informal sector can kick-start the economy while redressing old inequalities.
Despite the end of white rule in 1994, South Africa's banks have remained shy of black entrepreneurs, claiming there is higher risk of default in the black community and profits from the small loans would not even cover the banks' administrative costs.
During the anti-apartheid struggle many black communities began boycotting their home mortgage repayments as an economic protest. They chased bailiffs sent to repossess the houses.
'Red-lining' black neighborhoods
The continuation of this trend in the post-apartheid era has led to a mortgage default rate in black urban townships that is now12 percent, four times the national average, according to the Banking Council of South Africa (the umbrella group for the four dominant banking groups). Thus some institutions "red-line" (cease offering mortgages in) entire neighborhoods.
But President Nelson Mandela's government says the banks have "an exaggerated risk perception" of black borrowers and should be encouraged to change their minds. It has spent the past two years studying the effects of the US Community Reinvestment Act (CRA) of 1977, to see how it encourages American financial institutions to grant more loans to small, medium, and "micro" business in disadvantaged communities.
The move has been enthusiastically backed by US Treasury Secretary Robert Rubin, who attended a special business workshop in the black township of Soweto two weeks ago while touring Africa. Mr. Rubin told the assembled bankers, business people, government officials, and representatives of development agencies that South Africa needed to increase the amount of credit available to small entrepreneurs in disadvantaged areas and the US model could help.
"Your country has a world-class, sophisticated system of banking and finance," he said, "but access to credit is very unequally distributed."
The CRA grew out of the civil-rights era and was designed to encourage American banks to take more interest in lending to people from disadvantaged communities. In addition to cutting red tape, offering state subsidies and guarantees, and encouraging more flexible relationships between borrowers and lenders, the CRA and related legislation require banks to record and disclose social and ethnic patterns in their lending.
Several South African government departments have been involved in a two-year mission to study community-investment programs, involving visits to the US, says Gege Kekana, a spokeswoman for the Ministry of Housing,
"The United States is not the only country we are studying, but it is one of the countries that have done this successfully and where banks have been able to enter into low-income markets and still make a profit," Ms. Kekana says.
According to Bob Tucker of the banking council, the banks accept that more capital must be made available to the black community and would welcome the kind of positive incentives laid out in the US version of the CRA. But, he says, they worry that the government might end up trying to coerce banks into making bad loans. "At the workshop with Rubin somebody said, 'We should compel the banks to loan money like you do in America,' and he came right back and said, 'There is no compulsion. We put in place a lot of measures to help small business and make it profitable,' " Mr. Tucker says. "The trouble is that some South Africans seem to be keen on the idea of compelling banks to give people money."
Unrealistic about 'micro'?
The banks also worry that there may be unrealistic expectations about the role that "micro-enterprise" - typically self-employed subsistence hawkers - can play in the economy, and about the role banks can play in helping micro-enterprise. According to Tucker, hawking is a survival activity for the unemployed and creates little wealth in the economy. It is not profitable for banks to lend to people for whom $100 would be a major loan, he says.
"One of the difficulties of adopting the CRA will be that in America you have an average GDP per capita of around $27,000," he says. "In South Africa it is under $3,000, and many in the black community would earn less than $1,000 a year. The economies of scale are not the same."