President's approval of Postbank is yet another strategy to siphon taxpayer funds

29 September 2023

Yesterday President Ramaphosa signed the South African Postbank Limited Amendment Bill into law.

This Act will allow for the establishment of a new holding entity for the Postbank and was designed to facilitate the Postbank's registration as a Bank Controlling Company which will enable it to operate as a separate full-service bank.

The bank previously formed part of the South African Post Office (SAPO) structures and was one of its sources of income. By removing the bank from its structures, SAPO will become even less financially viable than it already was, to the detriment of the thousands of employees who have faced retrenchment and an uncertain future. And government simply doesn’t care.

The ANC justifies the establishment of the bank by claiming that it will more effectively facilitate access to financial services for small businesses and economically disadvantaged entrepreneurs. The party contends that the state bank would serve as a viable and affordable alternative to commercial banking institutions. No evidence was provided to support these claims and there is little doubt that it will merely serve as yet another mechanism to siphon taxpayer funds from the National Treasury into the pockets of its patronage networks.

At a time when government has run out of money and South African households are battling to put enough food on their tables in the midst of a government-induced cost of living crisis, government has chosen to add yet another drain. This is not sustainable and that is why a feasibility study was not conducted and the input of the Standing Committee on Finance only requested at the insistence of the DA. Government has run out of money and is scrambling to avert an inevitable debt servicing crisis by cutting at the periphery of its current overspending and avoiding the inevitable culling of hopelessly bankrupt state owned enterprises; adding another one and calling it a bank won’t miraculously make more money appear.

By signing this Bill, the President has paved the way for a deepening crisis of poor fiscal management.

Rather than wasting political capital by advocating for a state bank, efforts should have been channelled into creating bankable business opportunities, both within the public and private sectors.

If the Government were genuinely committed to supporting underprivileged entrepreneurial hopefuls, it would have focused on nurturing a stable and conducive policy environment for small businesses and up-and-coming entrepreneurs. This could have been achieved by simplifying bureaucratic processes, enhancing service delivery, and implementing the much-vaunted government infrastructure spending plans.

What we need are not new institutions, but focused, evidence-driven interventions to address our deteriorating social and economic situation.

The DA does not support the establishment of this new bank or any appropriations to fund it.

Issued by Dion George, DA Shadow Minister of Finance, 29 September 2023