Durban - The call by the ANC to create a state bank is a step in the right direction that could save South Africa from rising tensions caused by inequality and economic exclusion.
“South Africa is currently one of the most unequal societies, that is not sustainable,” said Patrick Dlamini, the chief executive of the Development Bank of Southern Africa.
Dlamini was speaking to The Mercury at the sidelines of the India-Africa investment and development conclave held in New Delhi, India, last week.
“This call for the creation of a state bank should be listened to very carefully because it is coming from a certain quarter that feels left out by the commercial banks.
"The state bank could close that gap.”
Recently, the ANC called for the development of a state bank that could be used as the state’s main banker. Ithala bank was seen as the favourite, with the ANC Youth League in KwaZulu-Natal saying they would be opening their accounts there.
Dlamini said a state bank could help alleviate inequality and poverty through making financing available, especially for small enterprises.
“The people need a bank that will support them. The commercial banks do not make money available for funding small businesses,” he said.
Dlamini said the country was standing on the edge of disaster due to the huge economic disparities between the rich and the poor.
Dlamini said there was also a need for the government to redefine the role of Development Finance Institutions (DFIs) in the country and in the provinces to make sure they fulfilled and supported the government mandate.
“You could look at an institution like the Land Bank and review their role. What are they doing in agriculture?”
He said the board of directors of those institutions should be the right people who were able to lead the organisations to fulfil government mandates.
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“South Africa is not short of money. These DFIs could be the catalyst for investment, as they could invest in infrastructure and development, making it possible for private investors to come in and to create meaningful development."
He said the lack of development was destroying the continent.
“We have a saying in the banking sector which says that if you want advancement in life, you must take practical steps to make sure that ideas are turned into bankable ideas.”
Speaking on business potential in Africa, he said African countries needed to change and trade more among each other, rather than looking outside the continent.