South African Finance Minister Tito Mboweni. REUTERS/Sumaya Hisham
FORMER finance minister Tito Mboweni has placed himself in the spotlight again after tweeting about the impact of a state bank in South Africa.
Mboweni tweeted on Thursday that: “Economic transformation is not going to happen in South Africa without a State Bank. The current banking and finance system is not geared for transformation. We need a disruption. A State Bank!! Without access to Finance Kapital (sic), we are in a breakfast picnic!”
Mboweni has tweeted about creating a state bank several times in the past. His latest tweet comes after the South African Reserve Bank said, on Tuesday, that it planned to list African Bank Holdings (ABH) on the JSE, as none of the investors interested in a 50% stake in the retail bank was suitable at this stage.
Chris Malikane, an associate professor of economics at the University of the Witwatersrand, said he regarded the tweet as rhetorical. Malikane said Mboweni had been in a very powerful position as minister of finance, and should have strived to be consistent, but instead he did the opposite.
“The problem is that Mboweni has shown that he cannot be taken seriously. He gives us the impression that the economy to him is something you can play with. He is no longer in a position of responsibility and is making fun of these genuine causes that can change power relations in the economy.
“He is trying to be relevant with those who are radical in the ANC and NEC (national executive committee). He is trying to appease the masses.”
Carl Niehaus tweeted that Mboweni was insulting people’s intelligence.
“When you had power as #MinisterOfFinance to do something about the establishment of a #StateBank you did nothing to execute that @MYANC Conference Resolution. In fact you trashed the idea.”
However, private financial consultant Emerald van Zyl supported Mboweni, saying that a state bank would stop black people paying up to 4% more on their home loans.
Modibe Modiba, co-founder of the The Insight Factor, tweeted: “Tito Mboweni tweeted about a State Bank before he became minister. He later became minister and received a nice salary, then he went quiet and forgot about the State Bank. Now he is out again and talks. He had the opportunity but did nothing. The old man must cook tinned fish, we are tired.”
Following his resignation as an MP in February, Mboweni has been appointed as the chairperson of the Accelerate Property Fund.
Last week, Cosatu called for Postbank to be reoriented into a state bank following the recent approval by the Cabinet of the submission of the South African Postbank Amendment Bill of 2021 to Parliament.
Calls for the establishment of a state bank, to give South Africans an option other than commercial banks, have also come from the Black Business Chamber, political parties and analysts.
During a round-table discussion in February last year, President Cyril Ramaphosa and then finance minister Mboweni both expressed their support for a state bank, specifically as a way of providing loans to poorer South Africans.
In February last year, Mboweni tweeted: “A State Bank is a potential positive disruptor to our financial system. I support its establishment. Finance Kapital (sic) is fundamental to our economic transformation. No debate about that.”
In 2019, Parliament passed legislation allowing state businesses to apply for banking licences.
In July of that year, Mboweni tasked the deputy minister of finance with the responsibility of undertaking the state bank project.
“I am pleased to inform the House that preferred options for the establishment of a bank are now ready,” he said in Parliament, as he tabled the 2020 Budget. Parliament had passed legislation to allow state-owned enterprises to apply for banking licences. The architecture of the proposed bank would be that of a retail bank operating on commercial principles.
The bank would be subject to the Banks Act and would have an appropriate capital structure and performance parameters on investments and loan impairments.
“It will be regulated by the Prudential Authority (PA) on its own merits. We will also consolidate the currently fragmented system of national and provincial development finance institutions,” he said.
The PA is responsible for regulating banks, insurers, co-operative financial institutions, financial conglomerates and certain market infrastructure.
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