This article was first published by Daily Friend on 8 February 2025
A survey conducted by DearSA in April 2023 regarding the Postal Amendment Bill found that 94% of the participants did not support it. Only 1% did, and the remaining 4% were undecided.
Despite the survey resulting in a majority opposing the bill, President Cyril Ramaphosa disregarded the popular will and signed it into law in September of that year.
In February 2024 Ramaphosa announced that the Postbank Amendment Act would become active law in the country from the 19th of that month onwards. The act essentially paves the way for Postbank, which has operated as a subsidiary of the Post Office since its inception, to become a fully-fledged and independent state bank that provides banking services.
The idea of a state bank is misguided because it is premised on the myth of a “racist” private banking sector. In May 2021 the late former Governor of the Reserve Bank, Tito Mboweni, said, “When I was in the private sector, I knew that the banking industry could not support me in some of my biggest ventures because they could see that there would have been a very successful black person.”
He further noted: “So the need to find a financial mechanism, a state bank, to support the emergence of black agriculturalists and black industrialists is very important.”
The claim that banks have been denying and continue to deny black people access to financial capital is objectively false. In an article he wrote recently for Daily Maverick, Ray Mahlaka makes the point that there has been a general improvement in the access that South Africans have to financial capital and banking services in the past 20 years. This is according to a research organisation known as FinMark Trust (whose data is widely cited by National Treasury), which found that the number of unbanked people in South Africa has declined significantly between 2003 and 2023.
Having said that, it is equally true that access to financial capital remains a challenge, particularly for black entrepreneurs. The real reasons for this have nothing to do with racism and everything to do with the ANC, which has failed to create stable employment on a mass scale for black people and grant them property rights.
What’s important to understand about banks regarding access to financial capital is that they must assess whether potential loan recipients can repay their loans. People who have no stable income or insufficient collateral are deemed a financial risk because the possibility of them not repaying loans is extremely high or almost certain. They are, therefore, denied access to capital.
It is no secret that unemployment disproportionately affects black South Africans. This is one barrier that limits their ability to access capital from banks, which use stable incomes as a measure of creditworthiness. The other barrier relates to the question of property rights. The ANC has denied millions of black people the right to be property owners.
Not only do black people reside insecurely on hectares of land held in the Ingoyama Trust; they also remain tenants on urban township plots because many local municipalities have failed to transfer title deeds to them. Property is an important form of collateral that aids people in securing loans by providing banks with a bulwark against defaulting. For as long as black people remain tenants on land that is rightfully theirs, they will not be able to use their properties as a form of collateral to attempt to secure capital.
These are the underlying issues that the ANC, alongside its partners in the Government of National Unity (GNU), should be working to resolve instead of attempting to create a state bank. It should liberalise the economy and allow the private sector to create jobs for poor and unemployed blacks. It should learn from the Free Market Foundation’s Khaya Lam project, which since its inception in 2013 has transferred over 13 000 title deeds to disadvantaged families.
Beyond the myth of racism and the need to address these underlying issues, the idea of a state bank is problematic for two reasons. The first reason is that it will most likely impose another tax burden on an already overburdened taxpayer base. Running a bank is expensive. The second reason is that the ANC has a poor record of managing banks. Ithala Bank is currently facing liquidation on account of mismanagement and the Postbank in question has consistently lost billions of rands every financial year. Given this context, why should the ANC be entrusted to run another bank?
An obvious retort from critics will be that a more ethical and competent government can manage a state bank. The problem with this kind of reasoning is that it ignores the very nature of government as an institution. Government is ill-suited to participate in the private sector because it lacks a profit motive. It has no incentive to manage institutions efficiently because its primary objective is to provide public goods and not compete against other competitors in the market. When it collapses institutions, it doesn’t go out of “business”. As we have observed in our own country, it rather and simply uses state resources to rescue them.
Aside from addressing unemployment and the issue of title deeds, the GNU must additionally encourage black people to mobilise resources in their own communities so they can support entrepreneurs and finance other social programs. The focus must be on decentralised solutions and not expanding the size of our already large state.
After all, is ABSA, for instance, not an amalgamation of banks that began at a community level?
