Provinces want ‘banking mafia’ to be dumped
THE ANC has upped the ante in the fight against the country’s major banks as more provinces threaten to move government bank accounts to state and development banks.
At least three provinces — North West, KwaZulu-Natal and Limpopo — have indicated plans to dump commercial banks amid outrage about collusion in the banking sector, criticism that banks stand in the way of radical economic transformation, and calls for a judicial commission of inquiry into the four major banks.
Criticism of the banks intensified this year after the leak of findings by the public protector that Absa owed the state about R2.25-billion, which it received indirectly as a bail-out from the Reserve Bank under the apartheid government.
The ANC in North West has set its sight on “breaking the banking mafia” as it revealed a plan to close government accounts with Absa in favour of VBS Mutual Bank — which made headlines for giving President Jacob Zuma a R7-million loan to repay his Nkandla debt.
Dakota Legoete, the party’s provincial secretary, said the ANC was considering the proposal to close its Absa accounts as a way to force competition on the banking sector, while awaiting the creation of a stateowned bank.
“The banks are colluding and nobody is helping us. Everything is controlled by the big four banks. That is a monopoly and it is not helping our people,” he said.
Dakota cited Competition Commission findings that banks colluded in currency manipulation as the main reason why they needed to be challenged.
He also said the proposal was motivated by high banking fees and the inability by many smallbusiness owners to get finance.
North West premier Supra Mahumapelo threatened in his state of the province address to withdraw government accounts from Absa if the bank did not accede to demands to empower the majority of the black population.
In Limpopo, the ANC confirmed it was discussing instructing the government to support VBS pending the establishment of state-owned banks. It has yet to decide whether the provincial government should close its Standard Bank accounts.
Provincial ANC spokeswoman Khumbudzo Ntshavheni said the aim was to create accessible banking for all citizens. The government had to support VBS and she urged municipalities to start banking with it.
If the plans by the three provinces go ahead, it would be detrimental to Absa, which has been handed billions of rands by the National Treasury to be distributed to the provinces.
The ANC in KwaZulu-Natal is leading the effort, saying it would move its banking portfolio from Absa to Ithala — a provincial state-owned entity and development bank — once Ithala was granted its commercial licence.
KwaZulu-Natal ANC chairman and MEC for economic development Sihle Zikalala said this week that Ithala would be one of the state banks the ANC had been calling for.
“It’s all systems go. It will happen soon. Once we get an account with Ithala, it would be able to compete with all other banks including managing the government accounts,” he said.
The provincial cabinet will have to ratify the decision to move provincial accounts from Absa to Ithala, something that could present problems.
KwaZulu-Natal head of treasury Simiso Magagula said that as of Tuesday this week, Absa held R1.35-billion for payments to service providers, salaries to staff, and other obligations.
The move to state-owned banks would not be as easy as political heads think.
Magagula said the province would have to advertise a banking tender and consider all criteria before making a decision.
The banks are colluding. Everything is controlled by the big four . . . a monopoly