Premier Lesufi forges ahead with State Bank, despite entities available to assist small businesses that continue to struggle

5 December 2022

Instead of the Gauteng Premier Panyaza Lesufi focusing on assisting small businesses to be able to expand and increase their revenue through doing business with the government, he now wants to establish a state-owned bank.

This idea was first mooted by former Premier David Makhura in his 2018 State of Province Address (SOPA). He further stated that the objectives of this institution would be to provide financial support to SMMEs; township enterprises; women and youth businesses; and infrastructure development

In 2022, Premier Lesufi is making the same promise of establishing a State Bank. A State Bank that appears to be a duplication of the work that the Gauteng Enterprise Propeller (GEP) is currently doing.

In a recent reply to the oral questions asked in the Gauteng Provincial Legislature (GPL), the Premier explained that there are already several government entities that provide banking-like services in the province, such as GEP, the Township Economic Partnership Fund and the Gauteng Infrastructure Finance Agency (GIFA).

Why establish a state-owned bank if Premier Lesufi should only be focusing on ensuring that all these entities fulfil their mandate?

This will just be another waste of our taxpayers’ money. Earlier this year, the Township Economic Development Act was signed into law. This Act seeks to help township businesses grow and if the Premier is serious about growing the township economy, he will ensure that this Act is enforced instead of trying to create a new entity to help grow the township economy. It is no secret that GEP is not really assisting township businesses, which is their core mandate.

During Premier Lesufi’s address on 18 November 2022 in KZN, Ugu District, NCOP Taking Parliament to the People he said the following “We are putting aside R650 million to reclaim all our spaza shops in the townships from foreigners so that all these spaza shops can be owned by South Africans.”

State Owned Financial Institutions not only pose systemic risks to their economies but also threaten governments with potentially significant liabilities and with a need for a rise in taxes or reduction in government spending to make up for such financial shortfalls.

We will be submitting detailed questions regarding the establishment of the proposed State-Owned Bank in the GPL.

The DA is demanding that Premier Lesufi gets his house in order and starts whipping entities that are not delivering to deliver on their mandate, instead of establishing new entities.

The DA will be conducting oversight inspections to the various entities that are supposed to assist small businesses, particularly those in the townships to ascertain the challenges hindering them from delivering on their core mandate.

Issued by Adriana Randall, DA Gauteng Shadow MEC for Finance, 5 December 2022