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FIFI PETERS: A large view held by fairly a variety of people pertaining to South Africa’s banking sector is that it doesn’t cater for all, and that many small companies discover it actually exhausting to entry loans. The ANC authorities has mentioned that the answer – or a resolution – to this might be a state bank that might be extra inclusive in its lending practices, and in flip generate cash that would assist the financial system develop.
The drawback is the ANC authorities doesn’t have the most effective observe document in managing state firms already underneath its belt, and so what is going to make a state bank any totally different? These are among the questions I’m placing to the Minister of Communications and Digital Technologies, Minister Khumbudzo Ntshavheni, who at the moment mentioned that the Postbank was ready to launch a state bank, and she or he mentioned that there have been plans to roll out a hundred new branches and likewise revamp the Postbank’s infrastructure to be a absolutely fledged bank. Minister Ntshavheni joins the Market Update now for extra. Minister, thanks a lot on your time, ma’am.
KHUMBUDZO NTSHAVHENI: Thank you for having me, Fifi. Let me begin right here on the intro you simply made.
FIFI PETERS: I’m glad that you just plan to accomplish that as a result of that was my first query. The information you announc[ed] at the moment [January 10, 2023] is de facto important on the plans and the progress to launch a state bank. But I do know you have got heard the feedback I made in my intro concerning the observe document of the federal government and having the ability to efficiently run one other state-owned enterprise when a lot of the present ones haven’t acquired the most effective document. So let’s sort out that time first, ma’am. How will the state bank be any totally different?
KHUMBUDZO NTSHAVHENI: Let’s begin with the Postbank. Sure. The Postbank goes to be ruled like another bank. It’s ruled by the Reserve Bank. It has to comply [with] all the necessities of the Reserve Bank. And a part of that’s it had to require that we put a board there of the Postbank. That board has been put in place. That board had to undergo an evaluation, one by the Auditor-General of South Africa and, two … by the Reserve Bank. They even gave us the necessities that these board members should meet.
Secondly, when it comes to the Banking Act, the Postbank or any bank should have what known as ‘competent officers’. Those competent officers should fulfill explicit standards; these standards are usually not set by Khumbudzo Ntshavheni, they’re set by the Reserve Bank. And, because the board recruits them, additionally they go, once more, by means of a ‘fit and proper’ [assessment] to say [whether] they’re competent individuals when it comes to working the bank. And that’s what it’s.
I simply want to additionally make clear this factor saying ‘government does not have a [good] track record’. I’m a politician. I don’t run a division. Employees of the division run the division, and people persons are not all ANC members. So it’s a very unfair assertion to say the ANC authorities has no [good] observe document. It’s authorities staff who are usually not having a [good] observe document.
So what we now have resolved additionally within the [ANC] convention was to enhance authorities monitoring.
There’s been work to professionalise the general public service, however the bank just isn’t going to offer a public service. The bank goes to be ruled by the Banking Act.
That’s what I wanted to make clear.
In phrases of how far we’re, there are a few issues that we’re doing. One, there [is] the possession of the Postbank. Currently the Postbank is owned by the Post Office.
The Banking Act, once more, has a particular provision that says you possibly can’t have an SOE or a state-owned entity that isn’t financially viable proudly owning a bank. So subsequently we had to change or amend the Postbank Act to take away the possession of the Postbank from that of the Post Office and transfer the possession – meaning the shareholding of the Postbank – to authorities. The Minister of Communications and Digital Technologies is the shareholder consultant in that possession. That is the modification that we’re ready for parliament to finalise – and the structuring and creating of what’s referred to as the bank holding firm – so that you just don’t have the bank reporting to the minister, however the bank can have a bank holding firm which is, once more, regulated by the Reserve Bank to cope with that query that you just’re fearful about.
And then the opposite factor is the expertise house of the Postbank. The Postbank was working utilizing all of the amenities of the Post Office. The Post Office will then not have amenities which might be appropriate for the bank. We have accomplished the audits. We did the audits for the final 4 years. So with the Auditor-General, we submitted the reviews and we had to do an IT audit on our personal, although the Reserve Bank had already given us a variation on non-compliance with sure necessities of the Banking Act, together with the clearing system, the bank fee system and so forth.
We have been working with the Reserve Bank by means of the Prudential Authority to handle these challenges. The Reserve Bank got here out in December – as a result of the time period of the variation discover was ending on the December 31, 2022 – and mentioned, “We appreciate the progress you have made. We understand the challenge that you could not meet all the requirements in time because of the circumstances that prevailed in your environment. We are giving you another extension until December 2023”.
I’ve come out and mentioned, sure, we admire that the Reserve Bank has given us up to December 2023 to type out the expertise surroundings and all different banking gaps that we now have. But we’re assured, given the progress we now have made, that we’ll full that earlier.
In phrases of the IT programs our goal is to say by April that each one the issues that that relate to the expertise surroundings must be sorted by that point.
In phrases of the competent those who have to be employed within the Postbank, we’re assured that by June the board ought to have concluded that course of. And, working backward with the approvals and the assessments that the Reserve Bank will do, we’re going to advise the president on a date that we predict we can have first finalised the corporatisation of the Postbank. And that’s the first milestone.
And when the Postbank has been corporatised as a fully-fledged bank – as a result of at present it’s not a absolutely fledged bank – then we are going to say that is the mandate of the Postbank because it relates to its operate as a state bank.
FIFI PETERS: I suppose the view on the poor observe document of state-owned entities and laying a part of the blame on authorities is the truth that a lot of those SOEs fall underneath the Ministry of Public Enterprises … being the shareholder consultant of presidency. That’s seen because the place the place the buck stops. Loads of the hirings on SOEs will come from the Ministry of Public Enterprises. Therefore, when issues go properly we’ll clearly award the ministry for that. But additionally when issues don’t go properly, as I mentioned, the buck stops there. So I feel that that’s the place that view of the [poor record] comes from. What do you concentrate on that?
KHUMBUDZO NTSHAVHENI: I’ve 11 entities underneath me. I want I might move them throughout to Minister Pravin Gordhan, however I’ve acquired 11 entities [of which] I’m the shareholder consultant, and different ministers have others. I may give you an instance. Sentech is doing [well]. It is among the entities underneath me. I may give you an instance. We’re engaged on the SABC to ensure that it does [well].
What’s fascinating with what you say is when the ministers come out and say what’s being accomplished is mistaken, and isn’t going to make this entity worthwhile, we’re accused of interfering and all types of issues. I’ve been accused by the SABC, the very SABC that SAfm belongs to. And when the Auditor-General lastly got here out later with the audit report and mentioned [to the] SABC, “What you’re doing is not going to make you financially viable in the short- to medium term,” no person got here again to me to say, minister, you had been proper. Because I used to be elevating the profitability of the SABC, the commercialisation of sure companies and the method to sure issues, to say it doesn’t make industrial sense for an organisation that has to be commercially viable when we now have gone out and given them exemptions that they wanted, given them waivers after they wanted to have the waivers, to ensure that we untied their hand. So it isn’t the minister of public enterprises – and I don’t need to defend him – it’s all of us collectively and what we do with our establishment.
I simply use these two entities underneath my duty. I’m chargeable for Icasa, I’m chargeable for .ZADNA, I’m chargeable for the Films and Publications Board.
I’m chargeable for 11 entities. And of these 11 entities have solely three that aren’t doing properly. And we’re positive that within the three that aren’t doing properly, between two and three years we should always have them on firmer floor.
For me, that’s the arrogance I’ve.
But coming again to the Postbank, I’ll simply guarantee you [by saying] that this observe document of perhaps poor performance-monitoring, being weak on strengthening the governance and so forth, we are saying to you it isn’t solely the minister, it’s not solely authorities. It’s the Reserve Bank.
And you need to give credit score to the Reserve Bank, the Prudential Authority, which has been ready to maintain banks to account. They’ve been ready, the place there was issue, whether or not it was with the African Bank; I can’t bear in mind the bank that turned Capitec … later; those who collapsed – whether or not it was VBS; they’ve come out to say, that is how we’re saving this bank, or that is how we’re permitting this bank to go down. This is how this bank goes to be rebuilt. They’ve been very sturdy in monitoring, and I’m positive they’ve realized classes associated to the collapse of VBS to say what they want to strengthen in overseeing banks that even have neighborhood possession or authorities possession. They’ve realized classes to enhance on that.
And bear in mind, the Reserve Bank and authorities and the opposite industrial banks have shares in African Bank. There are classes and I’m positive with these classes the Reserve Bank will are available in very helpful to ensure that the Postbank won’t ever collapse.
But we don’t intend the Postbank to collapse. Why? Because it has a captive market. Remember each month they disburse R10 billion in social grants throughout the nation. With that quantity and their skill, that’s why we are saying we want the State Bank. They have a good foundation to stand on…. We ought to make an announcement later, the president ought to make announcement later, [regarding] what are we going to be sure we seed this bank with, to be sure that its steadiness sheet is at all times sturdy and it may carry out properly?
FIFI PETERS: I’m glad that you just talked about the African Bank, as a result of I used to be studying a remark from an economist on the weekend, an concept that he posted about African Bank, saying that maybe one other approach to launch a state bank can be to merge Postbank with African Bank, given, as you say, that the Reserve Bank is a giant shareholder there at African Bank. This explicit economist, Duma Gqubule, believes that administration underneath the CEO of African Bank proper now, Kennedy Bungane, is great and [he’d] handle maybe among the considerations round governance and safety. What do you concentrate on that?
KHUMBUDZO NTSHAVHENI: Look, for now I’m targeted on ensuring that the Postbank is corporatised. So when the Postbank is corporatised, the board of the Postbank will then think about the choices to strengthen itself if it has to do an acquisition of African Bank, as a result of you have got to purchase out the industrial banks which have shares there. If there may be cash to purchase out for the Postbank, it’s solely their resolution to take. But the place I’m, I’m targeted on delivering the corporatisation of the Postbank in order that we will have the state bank. How it consolidates itself to ensure that it performs stronger will likely be up to the board of administrators and government or the competent officers of the Postbank.
FIFI PETERS: Comments from the Minister of Finance, although, [show] that funds are tight, assets are constrained to set up a bank. Can you discuss to that and maybe the place the cash will come from and whether or not you will want cash, really, extra importantly from National Treasury, to go forward with this?
KHUMBUDZO NTSHAVHENI: Those feedback had been associated to African Bank as a result of if authorities had to make African Bank a state bank, they [would need] to pay R10 billion over, I feel, R10 billion or R30 billion to the industrial banks who’re shareholders of African Bank. Remember what was referred to as the soiled [bad] bank and the great bank? So that remark relates to that.
In the Postbank, if authorities doesn’t have to put additional funding in, we’re assured that with the present assets which might be out there and the power, how we seed it, it doesn’t have to be seeded by a money injection into the bank.
Interestingly, I had a dialog once we had been doing the activation with the chairman of the board of administrators of the Postbank, and he was saying, “What’s the possibility?” I used to be very clear: there’s no cash to seed. They should go and lift cash. They should go and ensure that as a enterprise they’re worthwhile, after which fund their operations going ahead. That’s why we’re not even planning to begin with a giant variety of branches, however beginning with 100 branches in order that we give them respiration house to construct on and ramp up and develop organically.
FIFI PETERS: Okay. Minister, ma’am, thanks a lot on your time. Thanks for taking all of the questions. Minister Khumbudzo Ntshavheni, the minister of Communications and Digital Technology, has been talking to the readiness of presidency to go forward with the state bank, with the Postbank.