South Africa needs a new state bank: Mboweni

Finance minister Tito Mboweni has again expressed his support for the introduction of a state bank in South Africa.

In a series of early morning tweets on Friday (5 February), the finance minister said that the ‘cry for a state bank is loud, clear and urgent’.

“A state bank is a potential positive disruptor to our financial system. I support its establishment. Finance Kapital (sic) is fundamental to our economic transformation. No debate about that,” he said.

Mboweni also expressed his support for former African Bank chief executive officer Basani Maluleke, who resigned from the position last week to pursue other career opportunities.

The finance minister called for a more public explanation of Maluleke’s departure and indicated that African Bank could potentially be used as a platform to create a state bank.

The issue of a state bank is likely to be the subject of discussion again when Mboweni tables his budget speech in parliament at the end of February.

In his 2020 budget presentation, Mboweni said that government is ready to establish a state bank, and that he had tasked his deputy finance minister David Masondo with the responsibility to undertake such a project.

In 2019, parliament passed legislation to allow state-owned enterprises to apply for banking licenses. The architecture of the proposed bank would be that of a retail bank operating on commercial principles.

The bank would be subjected to the Banks Act, and would have an appropriate capital structure and performance parameters on investments and loan impairments.

β€œIt will be regulated by the Prudential Authority on its own merits. We will also consolidate the currently fragmented system of national and provincial Development Finance Institutions,” Mboweni said in his 2020 budget speech.

The PA is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures.

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South Africa needs a new state bank: Mboweni