The National Treasury says that it will move forward on its plans to introduce a new state bank for South Africa.
Presenting to parliament on Tuesday (4 May), Treasury director-general Dondo Mogajane said that the new bank forms part of structural reforms that were announced by president Cyril Ramaphosa as the country focuses on a post-Covid recovery.
It is expected to help provide financial assistance to South Africans who are most in need. However, members of the committee have accused Treasury of dragging its feet on the issue, with the ANC promising to introduce a new state bank for more than a decade.
Mogajane said that a large amount of the technical work for the new bank has now been completed and that a memorandum has been prepared for the cabinet which outlines some of the possible forms the bank could take.
Some of the proposals include dissolving the current Postbank and creating a new state bank, or creating an entirely new state-backed finance institution from scratch, he said.
Another proposal could see some of the country’s Development Finance Institutions (DFI), such as Ithala, dissolved into a single entity.
President Cyril Ramaphosa and Finance minister Tito Mboweni have both expressed their support for a state bank in recent months, specifically as a way of providing loans to poorer South Africans.
In a February roundtable, 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.
“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 such a bank.
In a series of posts made on social media, 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.