Fikile Mbalula, secretary general of the African National Congress (ANC), reaffirmed the party’s commitment to establishing a state-owned bank to transform the country’s financial sector
Mbalula made these comments at a workshop about the State-Owned Bank Amendment Bill on 17 June following a recent trip to China.
They also come when the South African Postbank Limited Amendment Bill is set to be signed into law by President Cyril Ramaphosa.
This legislation aims to “facilitate the Postbank’s registration as a Bank Controlling Company, allowing it to operate as a fully-fledged bank”.
The State-Owned Bank Amendment Bill aims to unbundle the Postbank into a standalone national government-run entity.
Mblalula reiterated the ANC’s commitment to creating a state-owned bank in accordance with the party’s resolution.
“The government should move with speed in implementing the state bank resolution and finding a way of capitalising the bank”, he said to the ANC in KwaZulu Natal.
The idea for a state bank comes from the South African Communist Party as a potential solution to the unequal access to capital in South Africa, as commercial banks remain untransformed in both their ownership and allocation of capital.
“We aim to systematically undermine the legacy of colonialism and apartheid, especially its economic architecture that reproduces structural racism and sexism”, said Mbalula.
This follows on from the government’s desire to “have leverage over key economic sectors”, the secretary general said.
Mbalula’s comments come on the back of many attempts to create a state bank, of which the Postbank is only one.
Earlier this year, Finance Minister Enoch Godongwana said that unions asked him to replicate the Government Employees Medical Scheme (GEMS) in creating a housing bank.
“We need a similar arrangement with public sector employees to create a housing bank to create loans for them.”
The government housing bank will also provide loans to the gap market – people who earn too much to get RDP houses and too little to get mortgages from banks.
Godongwana added that a fully-fledged state bank via the South African Post Office is also under development.
State-owned bank will fail
Efficient Group director and chief economist Dawie Roodt said a state bank lending money to poor people is a bad idea and that it is likely to lose money.
Roodt’s shared his views in an ENCA discussion following ANC Secretary General Fikile Mbalula’s comments about their state bank plans during a workshop in KwaZulu-Natal.
Roodt is not convinced that the ANC’s plan for a state bank is a good idea which will serve the country’s needs.
He said the ruling party’s plan is most likely to give poor people access to credit to buy houses, cars, and other expensive things.
“If you create a state bank to lend money to poor people who can’t get money from normal banks, there is the potential to lose big money,” he said.
“Many poor people will not be able to repay their debt, which means it is another state institution which is going to fail.”
Roodt added that a state bank losing money would eventually result in taxpayers footing the bill.