Ithala ac­cel­er­ates plan to be­come a com­mer­cial bank

CityPress - - Business - PADDY HARPER busi­ness@city­

KwaZulu-Natal’s pro­vin­cial govern­ment is mov­ing to set up its Ithala de­vel­op­ment bank as a com­mer­cial bank by yearend – a move which will see it nom­i­nated as a state bank.

As a re­sult, the ANC in the prov­ince is plan­ning to move its ac­counts to Ithala Bank from ex­ist­ing banks, in­clud­ing Absa.

This week, KwaZulu-Natal’s eco­nomic af­fairs MEC and ANC chair­per­son Sihle Zikalala con­firmed that Ithala, which falls un­der his port­fo­lio, would be nom­i­nated as a state bank once it re­ceived its com­mer­cial bank­ing li­cence.

Ithala al­ready has about R600 mil­lion in de­posits from mu­nic­i­pal­i­ties and state-owned en­ti­ties.

This week, the bank also sealed a rev­enue col­lec­tion deal with eThek­wini Mu­nic­i­pal­ity, which will al­low con­sumers – in­clud­ing 563 000 house­holds which re­ceive posted bills – to pay their mu­nic­i­pal ac­counts.

eThek­wini has also in­di­cated that it will ask Ithala to ten­der for its busi­ness when its agree­ment with Ned­bank comes up for re­view. In 2015, the mu­nic­i­pal­ity signed a five-year deal with the bank to pro­vide trans­ac­tional bank­ing ser­vices.

In his ad­dress at the launch of up­graded fa­cil­i­ties by Ithala sub­sidiary Ithala SOC, held at Um­lazi’s Mega City Mall, mar­ket­ing man­ager Sandile Xolo said Ithala in­tended se­cur­ing a full bank­ing li­cence this year and “be­com­ing a fully fledged bank”.

This would “lay the foun­da­tions for the cre­ation of a state bank” and al­low Ithala, which has 39 branches around KwaZulu-Natal, to ex­pand its foot­print be­yond that prov­ince.

Zikalala said fi­nan­cial in­sti­tu­tions were key driv­ers of rad­i­cal eco­nomic trans­for­ma­tion and that Ithala had al­ready heeded the call to im­ple­ment the pol­icy.

Ithala was sym­bolic of “a new era in bank­ing” for his­tor­i­cally dis­ad­van­taged com­mu­ni­ties, he said.

“Let us unite be­hind a fi­nan­cial in­sti­tu­tion which is truly liv­ing the rad­i­cal eco­nomic trans­for­ma­tion ideal. “Is it not time now to fa­cil­i­tate the change we de­sire?” Zikalala said his de­part­ment would push govern­ment to as­sist with the li­cens­ing process and con­firmed that the ANC would move its ac­counts there once this was done.

The an­nounce­ment comes against the back­drop of the Com­pe­ti­tion Com­mis­sion’s find­ing that 17 banks had col­luded to rig the ex­change rate and the out­rage over the Pub­lic Pro­tec­tor’s leaked re­port find­ing that Absa owed govern­ment R2.5 bil­lion from an apartheid-era bailout.

The ANC Youth League in the prov­ince has also called on govern­ment to move its ac­counts to Ithala, with Zikalala say­ing this week that Ithala would be able to “com­pete with other banks, in­clud­ing man­ag­ing the govern­ment ac­counts”.

The eThek­wini deal, which will see Ithala de­velop the pay­ment and billing sys­tem over three years in re­turn for R8.8 mil­lion from the city, was ap­proved by Dur­ban’s ex­ec­u­tive com­mit­tee this week.

Mayor Zandile Gumede said the pa­per­less sys­tem in­tro­duced by Ithala would save the city R135 mil­lion an­nu­ally. “Over the past years, Ithala has been at the fore­front of the trans­for­ma­tion of the pro­vin­cial econ­omy through wealth re­dis­tri­bu­tion and the cre­ation of en­trepreneurs at the bot­tom of the pyra­mid.”

“This sys­tem will be able to cre­ate about 325 jobs for our youth and re­dis­tribute about R50 mil­lion to lo­cal busi­nesses such as spaza shops and lo­cal su­per­mar­kets.”

Since 2009, Ithala has ap­proved loans for small, medium and mi­cro en­ter­prises (SMMEs), to­talling more than R478 mil­lion, for more than 465 en­ter­prises in agri­cul­ture, man­u­fac­tur­ing, ser­vices, con­struc­tion, en­ergy, tourism and other sec­tors.

Through the fi­nance pro­vided to SMMEs, Ithala fa­cil­i­tated the cre­ation of more than 3 500 jobs.

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