ANC/EFF's State Bank proposal a fantasy – Gwen Ngwenya

DA MP says idea is financially incoherent, hypocritical, redundant and thus doomed to fail

The DA opposes the ANC’s State Bank proposal as delivered vicariously by the EFF

30 April 2018

The DA stands ready to oppose a proposal by the EFF to establish a “state bank”, not only because it is a bad idea but also because it is in effect a “dead duck” which will do nothing to help the unbanked whom it purports to serve.

The EFF’s memorandum for the establishment of a “state bank” has been published in the government gazette. The draft Bill is yet to be tabled but past EFF communication on the idea of a state bank, which closely mirrors that of the ANC, has shown the idea to be financially incoherent, hypocritical, redundant and thus doomed to fail.

The EFF’s fantasy is such that they are not interested in a financially sustainable ‘state bank’ but one which will, as stated in one of their policy documents, “provide enterprise finance, housing finance and vehicle finance for all South Africans in a manner that promotes development, not the narrow pursuit of profits.”

With more South Africans dependent on social grants than there are in employment, the EFF’s Bill will propose to have a population both indebted and dependent on the government.

Worse still, this is the same EFF that opposed the granting of student loans arguing that they create debt but is comfortable with the idea of saddling the poor with debt obligations that they won’t be able to service.

Ten years ago, the ANC Youth League Congress at Nasrec called for a state bank which will ‘deal with the financing of developmental programmes such as housing, transport, infrastructure, and new industries’. This is a redundant call because development finance institutions such as the Industrial Development Corporation, the Development Bank of South Africa, and the Land Bank already exist.

When this Bill, and other associated regulations related to the state bank, is introduced and moves its way through parliament the DA will:

- Ensure that the freedom of civil servants to transact with whomever they choose is protected and that public servants are not obligated to bank with a state bank.

- Compel the ANC and EFF to engage in evidence-based policymaking. We look forward to interrogating the models that would allow for a state-owned company in South Africa to sustainably extend credit at low-interest rates to the unbanked with no recourse to the fiscus.

- Request the BSD of SARB to identify the potential risk factors associated with a state-owned bank, and how these would impact the banking sector as a whole.

The DA will oppose the ANC’s proposal as delivered vicariously by the EFF, and calls upon all stakeholders to do the s.

Issued by Gwen NgwenyaDA Member of the Finance Committee, 30 April 2018