Finance Minister Tito Mboweni has reiterated his support for the establishment of a state bank that would “operate on business principles … in order to get the economy to grow.”
Mboweni previously expressed his support for the state bank during the 2020 Budget Speech and more recently said that the “cry for a state bank is loud, clear and urgent” in a series of tweets.
The African Bank is a potential platform to create a State Bank. The cry for a State Bank is loud, clear and urgent!
— Tito Mboweni (@tito_mboweni) February 4, 2021
During last year’s budget speech, Mboweni said the state bank would be subject to the Banks Act and that it would have “an appropriate capital structure and performance parameters on investments and loan impairments.”
But in this year’s budget speech, presented in February, Mboweni made no mention of the establishment of the bank, focusing rather on government’s plans for fiscal consolidation in light of the country’s debt crisis.
While responding to the debates by members of Parliament (MPs) in the National Assembly on the 2021 budget, Mboweni still insisted that the establishment of the bank is critical to economically support the country’s population.
“In my view the African Bank offers a platform [for the state bank] because the PIC [ Public Investment Corporation] and the Reserve Bank own about 50% of the bank,” he said.
Mboweni’s announcement follows the cabinet’s approval of the publication of the South African Postbank Amendment Bill for public comment in February. The Bill provides for the establishment of the South African Postbank Holding Company in terms of the Banks Act and is aimed at providing for the inclusion of financially-excluded members of the public to participate in economic activities.
The amendment also seeks to provide a facility for some of the government’s financial services.
Mboweni briefly responded to other issues expressed by MPs regarding the budget, such as the public wage bill, zero-based budgeting and the possible introduction of a universal basic income grant.
The contentious state wage bill should “not be politicised,” according to Mboweni but should rather be carefully handled “so that we [public servants and government] come to an understanding” about how to deal with the matter.
Public-sector unions have filed papers at the Constitutional Court which aim to overrule the Labour Appeal Court’s decision to dismiss their case to compel the government to implement the last leg of the 2018 agreement. Meanwhile, the state aims to reduce its spending by R264.9 billion over the next three years due to a freeze on public wages.
The National Assembly adopted the finance committee’s reports on the budget on Wednesday.
The success of the budget is largely premised on the successful ongoing wage negotiations between the government and public sector trade unions. The committee noted its concerns regarding the matter, given the government’s failure to make any wage bill savings despite its previous announcements.
“The committees remain concerned that despite government’s efforts to support job creation, the rate of unemployment reached a record level in the last quarter of 2020, making it extremely difficult for the economy to absorb new entrants into the labour market – particularly the youth,” Parliament said in a statement.