South African finance minister Enoch Godongwana said they are looking at launching a housing bank to provide loans to public sector employees and the gap market.
Godongwana revealed their housing bank plans in a CNBC Africa interview at the World Economic Forum’s annual meeting in Davos.
He said the unions asked the government to replicate the Government Employees Medical Scheme (GEMS) to create a housing bank.
“We agree with the unions that we should do a similar exercise as we did with medical aid by creating a state medical aid called GEMS,” he said.
“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.
“The challenge for a state bank was the regulatory framework. That regulatory framework is coming true,” he said.
“The second issue is sufficient instruments for a state bank. There are discussions about whether we should merge African Bank with the Post Office to create a bigger state bank.”
He added that the regulatory framework for a state bank would be similar to the regulations for any other bank.
“When tailoring the state bank products, it will take that into account,” he said. “That process is in motion.”