Johannesburg - The Gauteng provincial government has been given the thumbs-up to establish a provincial state-owned bank, more than six months after Premier Panyaza Lesufi declared it a must by his government.
On Tuesday, Gauteng Finance MEC Jacob Mamabolo, who was tasked with completing the process of establishing a state-owned bank and a provincial pharmaceutical company, received a feasibility report from the law firm Malatji & Co Attorneys, which endorsed the initiative. According to the CEO of Gauteng Infrastructure Financing Agency (GIFA), Oupa Seabi, the government spent more than R4 million to commission the two reports.
Accepting the report, Mamabolo said the legal report on the state bank was the second recommendation to go ahead with the establishment of the bank. He said that in April this year he received a report from the advisory panel on the pharmaceutical and health-care policy led by chairperson Amos Monyela, which also approved the establishment of a state-owned pharmaceutical company in Gauteng.
“Today, we have received a due diligence report which dealt with the legal frameworks to establish a pharmaceutical company and a state-owned bank. A few months ago, in April, we received a due diligence report from the pharmaceutical company.
“These reports complete the process testing what is the law saying on the establishment of the pharmaceutical company and state-owned bank,” Mamabolo said.
He said the two reports clearly spelt out the process which the provincial government must follow to set up the two institutions, most likely to be operational before the 2024 national elections.
Mamabolo emphasised this after facing a barrage of questions from the media, some of these insinuating that the ANC might lose the elections next year. In his reply, without even commenting on the insinuations, Mamabolo was adamant that the provincial government’s intention was to set up the two institutions with the hope of empowering township economies and small businesses across the province.
In his view, he said mainstream banks allegedly considered township businesses as “toxic risk areas” and promised that the state-owned bank would do business differently.
“The report helps us to navigate the way to establish the bank. It paves the way forward. The law says we must move forward with the plans. It also spells out how to deal with the complexities of establishing a bank,” he said.
Mamabolo further said: “We are now in a better position to move to the next level to consult with the premier and consult broadly with other stakeholders, including the Economic Development and labour.”
He said their government was convinced that by supporting township entrepreneurs, including ensuring that they have tailor-made financing products to expand their businesses, they will “create new jobs, increase access to goods and services, and promote much needed economic development in our communities”.
“The state-owned bank is one of the key mechanisms that can support us to grow the township economy and increase the overall contribution of Gauteng to the country’s gross domestic product,” he said.
Mamabolo, however, announced the modalities of establishing the two institutions after consulting with Lesufi and his provincial cabinet, who would be expected to make an announcement on the final plans, including the financing of the two institutions.
The Provincial Treasury is expecting to brief the MEC for Health and Wellness Nomantu Nkomo-Ralehoko and the MEC for Economic Development Tasneem Motara on the outcomes of the two reports on Friday before the meeting with the premier.