South Africa’s big banks cannot afford to sit on the sidelines and not contribute to reviving the economy and government efficiency, as no business can thrive in a country where infrastructure is deteriorating, and policy instability deters investment.
This is feedback from Standard Bank South Africa CEO Lungisa Fuzile in his capacity as chairman of the Banking Association of South Africa (BASA).
In the association’s latest annual report, Fuzile said that, besides volatility in the global economy and financial system, South African banks have to contend with a stagnant domestic economy.
As a result, they have had to increase their provisions for bad debt as households and companies struggle to repay loans.
Of great concern to Fuzile are the extended periods of severe load-shedding the country is being subjected to, adding further pressure to businesses and households.
The need to procure alternative energy sources has led to some businesses closing, resulting in job losses and the destruction of livelihoods.
Furthermore, the deterioration of vital infrastructure through corruption, theft, and vandalism has resulted in massive losses across the economy and a sharp reduction in tax revenue.
At the root of all this is the country’s collapsing state-owned enterprises, which are increasingly passing on their debt to the national government.
The Reserve Bank said this has resulted in the domestic financial sector being highly exposed to government debt.
“This is but one example of why banks cannot sit on the sidelines but must contribute whatever they can to reviving the South African economy and increasing the efficiency of the state,” Fuzile wrote.
Addressing these issues is in the interest of South African banks and the country as a whole.
“No business can thrive – create jobs and profits for its investors – in a country where vital economic infrastructure is deteriorating, and policy instability and incoherence deter long-term investment.”
Fuzile has previously made it clear in his capacity as Standard Bank South Africa CEO that businesses have an interest in saving South Africa – not the ANC.
He said CEOs and private companies are stepping up to help the government for South Africa’s benefit and not to help the ruling ANC get re-elected.
When asked if the government would manipulate the help offered by businesses to ensure the ANC wins the election next year, Fuzile clarified the private sector’s priorities.
Fuzile said businesses are unashamedly engaging with the government to help capacitate its institutions to benefit South Africans, not the ruling party.
For the CEOs, it does not matter if the ruling party manipulates the private sector’s help to win an election or takes responsibility for turning the country around as long as South Africa’s situation improves.
Even if a different government comes into power in 2024, Fuzile said business would unashamedly help that government improve South Africa’s situation.