Gauteng doubles down on new state-owned bank

Gauteng MEC of Finance and Economic Development, Lebogang Maile says the province still has its sights set on establishing a provincial state-owned bank.

“We will intensify efforts to finalise the establishment of a provincial State Bank [whose] key objective will be investing in projects characterised by low private sector investment and high social returns,” he said.

Plans for a state-owned provincial bank were touted in 2022, but Maile said that these plans never really gained traction due to opposing views of how the bank would operate.

Now, the Finance MEC said that consensus has been found that it should take the form of a ‘public-private partnership’ between the state and the private sector

“There are certain things that can be done better when you work with the private sector; that’s why, in this case, it’s not just about a state owning it 100%; we will need the private sector to work with us.”

When pressed by the SABC about the ill-fate of many of South Africa’s state-owned enterprises (SOEs) to endemic corruption, Maile said that the Gauteng government is not looking to do it on its own, and having partners involved would ‘keep them in check’.

The Finance and Economic Development MEC said that the province is actively looking for a “partner who knows how to run a bank, has systems, money, knowledge [and] skills so that we don’t try and learn on the job.”

Maile said that Gauteng is getting ready to put a formal proposal to a bank in the coming weeks; however, they cannot divulge which bank that is yet.

Additionally, the province has not yet divulged exactly how the funding of the bank will work.

The MEC responded to questions about this from the SABC with “we will work with the private sector.” However, it did not go into details about the fiscal implications.

The establishment of a provincial state-owned bank is not a new concept touted by the Gauteng government.

Plans to establish the state bank were announced by Premier Panyaza Lesufi during his maiden State of the Province Address in 2023 after touting the idea in 2022.

“The idea of the Gauteng State Bank is predicated on the principle of the state intervening in the economy,” said Lesufi.

The Premier said that this follows the resolutions of the 54 National Conference of the African National Congress, which “affirmed that the state must develop a more effective program to ensure access to, and ownership of financial institutions by black people, youth and women.”

Lesufi previously said that the bank would “extend access to financial services to all residents, specifically those who remain largely excluded from accessing financial services.”

It would “provide tailored products such as a streamlined, low-cost transaction product with value-added features and could expand in future to include loan products,” he added.

The Gauteng government has argued that having a state-owned bank is “one of the key mechanisms that could support the growth of the township economy and increase the overall contribution of Gauteng to the country’s Gross Domestic Product [GDP].”

Gauteng’s GDP is just over R2.4 trillion – almost 34% of the national GDP.

However, unemployment remains one of Gauteng’s biggest challenges.

“Gauteng’s unemployment rate at 33.7% is higher than the national average of 32.9%. Based on its working-age population, 4 out of 10 or 40% of people entering the labour force in South Africa are in Gauteng,” said Maile.

In hopes of changing this, the MEC said a state-owned provincial bank in partnership with the private sector might be the answer, as “a state-owned bank might bring great relief and help small businesses to access funding.”

The official opposition in the province, the Democratic Alliance [DA], previously slated the idea of a state-owned bank in the province, saying that “it will be yet another dysfunctional state-owned entity that the ANC and its cadres will raid to the detriment of hard-working South Africans.”

“Gauteng should rather focus on ensuring that the Township Economic Development Act is properly implemented to assist struggling township entrepreneurs and SMMEs,” added the party.

Read: Minority Gauteng cabinet announced – with DA in the opposition benches