This week, the director-general of Treasury, Dondo Mogajane, said that a new state bank is part of a number of structural reforms that was announced by President Cyril Ramaphosa, BusinessTech reports.
The bank is expected to provide financial assistance to those who are most in need. But some members of the committee said that Treasury was dragging its feet on the matter, as the ruling party has been promising to start a state-owned bank for more than a decade.
According to Mogajane, the bulk of the technical work required to launch the bank has been done and a memorandum has been compiled for the cabinet that details the possible forms the bank could take.
The proposals include dissolving the existing Postbank and creating a state bank or starting from scratch and creating an entirely new entity.
Another option is to merge some of the country’s existing Development Finance Institutions (DFI) into a single entity.
In February President Ramaphosa stated his support for the establishment of a state-owned bank.
Said President Ramaphosa: “I fully support the establishment of a state bank at an organisational and state level. There is space for a state bank. The Land Bank is a state bank. The IDC (Industrial Development Corporation), if you like, is a state bank. Many developing countries have a number of state banks.
“If we had such an entity, even the R200 billion that we asked banks to administer could be channelled to it. And truth be told, our banking sector is risk-averse.
“They are entities that operate in the middle sector and are willing to take risks with debt levels that are now exponentially high. I would say we need a state bank and I would insist that it be run in accordance with the best governance principles.”
The Minister of Finance, Tito Mboweni, has also previously expressed his support for a state-owned bank on social media, saying: “A state bank is a potential positive disruptor to our financial system. I support its establishment. Finance Kapital (sic) is fundamental to our economic transformation. No debate about that.”