Ramaphosa lends support to EFF proposal for state-owned bank
Eager to break the ‘monopoly’ of the big four banks in South Africa
CALLS for the establishment of a state-owned bank have gained fresh impetus, with President Cyril Ramaphosa voicing his support for an Economic Freedom Fighters (EFF) proposal to amend the law to allow the Post Office’s Postbank to be licensed as a full-fledged bank.
“We need to move away from the monopoly of just four banks in our country and create more banks so that there is more access to funding,” Ramaphosa said yesterday.
“You will find that in a number of countries there is a plethora of banks. The reason for that is to make finance accessible to a number of stakeholders,” he added.
The EFF’s memorandum for the establishment of a “state bank” has been published in the government gazette.
Graeme Körner of Körner Perspective said any state bank should be well capitalised and also have a commercial mandate.
“Such a bank would be good to finance programmes like the black industrialist programme. However, the bank must be commercially run and not throw ill-considered lifelines to state-owned institutions,” Körner said.
South African banks hold the first six places among the top 100 banks on the African continent. Four large banks dominate, with Standard Bank of South Africa, Nedbank, Absa and FirstRand Bank collectively accounting for about 85 percent of banking services in South Africa.
The entrance of Capitec more than a decade ago has offered stiffer competition.
However, the South African Reserve Bank has already granted licences this year to TymeDigital, Discovery and Bank Zero to operate.
Malose Kekana, in a survey commissioned by the University of Johannesburg, said a state bank would not be driven by a focus on only profits or return on equity.
“What South Africa needs is a model akin to the Brazilian Development Bank, a large state-owned industrial bank that takes deposits and funds large industrial projects and also has intermediaries that focus on small, medium and micro-sized enterprises,” Kekana said.
Transformation in the financial services sector has been a perennial hot potato in the national dialogue in recent years.
The National Empowerment Fund last year told legislators that R244.6 billion would be needed to achieve the 25 percent black ownership target in the industry, as stipulated by the country’s broad-based black economic empowerment codes.
Ramaphosa referred to stokvels as a way of transforming the banking sector.
“In our rural areas, there is a need for something that will amount to a stokvel bank.”