Idea of a state bank is reckless - DA
The Economic Freedom Fighters (EFF) has introduced a private members bill to parliament to allow the establishment of a state owned bank in South Africa.
The bill seeks to amend the Bank Act to make it possible for state owned companies to register in terms of that Act and to conduct the business of a bank.
EFF deputy president Floyd Shivambu explains further.
The state bank is not going to be narrowly driven by the profit motive, it will be about giving access to finance for ordinary South Africans. Provided for mortgage purposes, vehicle and business finances because the infrastructure of banking in South Africa currently excludes a huge majority of people.Floyd Shivambu, EFF deputy president
If you were for instance to use the example of pubic servants, we have more than 70% of public servants that do not have access to mortgage finance because they are either too rich to get an RDP house and two poor to get mortgage finance from mainstream banks.Floyd Shivambu, EFF deputy president
The state owns one of the biggest asset managers in Africa called the Public Investment Corporation which is owned fully by the state, it owns the DBSA which is not found at fault in terms of what it does, it owns the land bank which is not full licensed but deals with banking services in a fully efficient and effective way so to them disallow the state to own a full licensed bank in terms of the Bank Act is just plainly irrational.Floyd Shivambu, EFF deputy president
The Democratic Alliance (DA) is opposed to the idea.
DA Member of the Finance Committee Gwen Ngwenya says the proposal is redundant and reckless.
This is something that the ANC had resolved but be that as it may it has now been gazetted by the EFF. Ten years ago, the idea was that the state bank would be there as a sort of developmental institution. We already have other developmental finance institutions such as the DBSA, IDC, the land bank and any shortcomings that these organisations have should be dealt with first as opposed to creating a new institution that's really filling gaps that existing institutions are there to provide.Gwen Ngwenya, DA Member of the Finance Committee
We think this is incredibly reckless especially when you mentioning things like extending vehicle finance to really what we are talking about as the poorest of the poor because when you are talking about the unbanked, you are talking about those people which private sector banks clearly with their risk profile, have seen that they would not be able to extend credit services to...Gwen Ngwenya, DA Member of the Finance Committee
It's not going to pursue profits but at the same time it must be sustainable, these are very contradictory aims.Gwen Ngwenya, DA Member of the Finance Committee
Click on the link below to listen to the full conversation....
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