The umpteenth call by the largest labour federation for the creation of a state bank will come to nothing unless sweeping governance changes are made to the South African Reserve Bank, KwaZulu-Natal Cosatu provincial secretary, Edwin Mkhize said this week.
Even as Cosatu accepts that the government must take necessary steps to open the banking sector to more players, including state-owned entities, the provincial leadership argued that he creation of a state bank will not yield the desired outcomes unless the government considers introducing sweeping changes to the South African Reserve Bank (SARB).
Mkhize said as things stood, the provincial government had KZN Growth Fund of R3-billion invested in commercial banks when in fact these funds should be banked in the proposed state bank to be used to develop small, medium, and micro enterprises, and by extension to create jobs “for a sea of unemployed South Africans”.
“We need to tread very carefully. There are pertinent and critical questions to be asked such as whether the state bank, under an untransformed SARB, will work, or yield the desired results sought by the federation,” Mkhize told Sunday World.
The legislation to create a state bank is currently being considered by parliament.
Ithala Bank CEO Thulani Vilakazi said South Africa operated under a restrictive regulatory environment.
“If you look at the Nigerian financial sector, there are specialised lending institutions specific to a particular purpose. There are also payment and housing or construction banks. One of the top banks in China, which has over R1-trillion in assets, was started as a regional bank,” said Vilakazi, adding that this is the approach SA must be adopting.
General secretary of the SA Communist Party Solly Mapaila said the government lacked the political will and decisiveness.
“We have development finance institutions such as PIC (Public Investment Commission) and IDC (Industrial Development Corporation) that have accounts with commercial banks.
What nonsense is that? Development finance institutions should have their own banking licences to drive transformation,” said Mapaila
He argued that the government had chosen to be a bystander, acceding to big capital’s dictates, which called the shots and determine the rules of engagement within the tranformation sphere.
“Why on earth developing nations do not have their own financial institutions boggles the mind.
“We must change the way we have been doing things if the country is to improve.
“The lack of public banking institutions has been a huge setback. We have industry, and we have sovereignty as a country. The banks are running amok to share the loot. Banks are official robbers,” added Mapaila.
ANC provincial secretary Bheki Mtolo said the inputs collated would be the province’s contribution to shape the bill taking place in government.
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