Durban – KwaZulu-Natal has identified Ithala Bank as a future state bank following calls by the ANC to move government accounts from commercial banks to a state financial institution.
The provincial government had been raising concerns about the delay by the government to implement the ANC’s resolution of radical economic transformation such as establishing state-owned institutions, including a state bank.
The ANC Youth League in KwaZulu-Natal had also called for the government departments and municipalities to move their accounts from commercial banks to a yet-to-be-established fully fledged state bank.
The league had called for the ruling party to close down its major commercial bank accounts.
The ANCYL’s call followed findings by the public protector that Absa owed the state about R2.25 billion, which it indirectly received as a bailout from the apartheid government’s South African Reserve Bank, but failed to return.
KwaZulu-Natal Economic Development MEC Sihle Zikalala said at the relaunch of the bank’s branch at Megacity in Umlazi on Tuesday that Ithala would be one of the state banks the ANC had been calling for, once it had received its licence to operate as a commercial bank.
“Once we get an account with Ithala, it would be able to compete with all other banks including managing the government accounts,” he said.
He said calls by the ANCYL for the ANC to bank with a state bank had been considered. Zikalala also confirmed the statement by the DA provincial leader, Zwakele Mncwango, which he made late last week, that the ANC was considering using Ithala as its bank.
“Once we get Ithala licensed, yes, even the ANC accounts would have to be moved to Ithala,” said Zikalala.
He said even government leaders would bank with Ithala. “Yes this is the state bank, and therefore its growth would culminate into having Ithala becoming one of the major banks in the country that are owned by the state,” he said.
He said the government would assist Ithala with sorting out a banking licence.
“By the end of this year we should talk about Ithala with its own banking licence, we should talk about Ithala that has developed an infrastructure that would make it easy for our people to bank and to access their money wherever they are."
“At the level of the department, we will continue to knock at the doors of the Reserve Bank and we will continue to interact with the minister of finance with a view of expediting the process of granting Ithala its own banking licence,” said Zikalala.
Ithala was mainly established to provide banking services to rural communities, but Zikalala said it should now modernise its operations to be “relevant to people in townships. We must modernise to be able to appeal to young people. We must equally modernise to a point where we will attract as many business people as possible,” he said.
Zikalala said Ithala Bank operated in most of KwaZulu-Natal, but it was not available on the South Coast.
“When you go to Harry Gwala District, there is a serious cry about access to Ithala,” he said.
“Our (task) now is to modernise Ithala, resource Ithala and be available in all areas of KwaZulu-Natal.”
He said KwaZulu-Natal was just a starting point.
“There is no limit. We must reach all corners of the province, and at some point when we are satisfied, we must then move to cover the whole of South Africa.”
Zikalala called on Ithala to desist from engaging in collusion.
“While Ithala must generate income, it must ensure that it does not manipulate our people,” he said.
Ithala chief executive officer Peter Ireland said the bank was preparing to accommodate municipalities and government entities by the end of the year.
Bank chairperson Malose Kekana said the bank already had R600 million in deposit from various municipalities and public entities in the province.
“We provide insurance to government entities,” he said.
Economist Bonke Dumisa said the decision to form a state bank was a noble idea that should be taken seriously.
However, he warned that for the state to mobilise all its resources to one bank would also not be savvy as that would put “all their eggs in one basket”.
“The government still wants to generate interest on its money and the state banks have a different mandate, which is not to make profit,” said Dumisa.