The government should consider buying one of the country’s banks to boost access to finance for its citizens and businesses, said Tito Mboweni, the former central bank governor, yesterday.
“Any one of the existing banks” should be considered, Mboweni said in an interview at a Johannesburg restaurant. “It’s a huge amount of money involved, but you must think big, beyond the squatter camp, and then amalgamate that with all these development finance institutions.”
President Jacob Zuma had promised radical economic transformation over the next five years to create jobs and spread wealth to the black majority. The government could not bring significant change without access to capital, Mboweni said.
The biggest banking groups in South Africa include FirstRand, Standard Bank Group, Barclays Africa Group and Nedbank Group.
FirstRand is South Africa’s biggest banking group by market capitalisation at R250 billion, while Nedbank, the fourth-largest, has a market value of R126bn, according to Bloomberg data.
The lender must be “a deposit-taking institution”, said Mboweni, who is a member of the ANC national executive committee.
“It’s a huge intervention and the advantage with acquiring one of the existing banks is that you have the infrastructure,” he added.
Postbank, a state company linked to the post office, which mainly distributes welfare payments, did not have the infrastructure or the “muscle”, he said. Mboweni said the country’s largest lenders were not doing enough to boost the investment needed to transform the economy.
He cited examples of small, black-owned businesses being denied loans for projects.
“I would imagine the South African authorities and government would have a lot of other priorities to deal with and areas to spend money on,” Maria Ramos, the chief executive of Barclays Africa, said on a conference call yesterday. “Buying one of the large banks wouldn’t be top of the priority list and it already owns a couple of banks; it owns Postbank and the Development Bank.”
While the Development Bank of Southern Africa and the Industrial Development Corporation were state-owned, they did not take deposits.
“A state development bank doesn’t mean 100 percent-owned by the state, but it must be majority-owned by the state because you want the determination of policy direction to be in line with your goals,” Mboweni said.
China had state-owned banks, it was “not impossible”, he said. “You need scale. You need quantum.”
Mboweni declined a nomination earlier this year for a seat in Parliament to instead focus on “economic transformation” through his Mboweni Brothers Investment Holdings.
A former labour minister in Nelson Mandela’s administration from 1994, Mboweni said he would consider returning to public office in the future.
He is currently non-executive chairman of packaging company Nampak and pan-African oil and gas exploration firm Sacoil Holdings.
He is also chairman of the Africa Centre for Economic Transformation and is an international adviser for Goldman Sachs.
“I think there’s a gap in the South African legislation where banks which are supposed to be the intermediaries, those who save and those who borrow, actually compete in the same market as the people who come and borrow from them,” Mboweni said. – Bloomberg