President Cyril Ramaphosa has expressed his support for a state bank, indicating that a number of other developing countries have these institutions in place.
Speaking to journalists as part of a SA National Editors Forum meeting on Friday (26 February), Ramaphosa said that the country’s banking sector is controlled by just a few banks and South Africans need more options in terms of accessing loans, News24 reported.
“I fully support the establishment of a state bank at an organisational and state level. There is space for a state bank. The Land Bank is a state bank. The IDC (Industrial Development Corporation), if you like, is a state bank. Many developing countries have a number of state banks.”
“If we had such an entity, even the R200 billion that we asked banks to administer could be channelled to it. And truth be told, our banking sector is risk-averse.
“They are entities that operate in the middle sector and are willing to take risks with debt levels that are now exponentially high. I would say we need a state bank and I would insist that it be run in accordance with the best governance principles.”
Finance minister Tito Mboweni has also expressed his support for the introduction of a state bank in South Africa.
In a series of tweets published in 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 is fundamental to our economic transformation. No debate about that,” he said.
A State Bank is a potential positive disruptorr to our financial system. I support its establishment. Finance Kapital is fundamental to our economic transformation. No debate about that.
— Tito Mboweni (@tito_mboweni) February 4, 2021
It is not clear whether government will push for a new entity to run a state bank or whether it will use one of its existing institutions – such as the land bank or post bank.
On Friday, cabinet approved the publication of the South African Postbank Amendment Bill for public comment. This will allow the post bank to offer more financial services to the public.
It said that the bill provides for the establishment of the South African Postbank Holding Company in terms of the Banks Act.
“The company will provide for the inclusion of financially excluded members of the public to participate meaningfully in economic activities. It will also provide a facility for some of the government’s financial services,” it said.