Ithala’s logos in front of a building on a road The ANC's Nkosenhle Madlala said what has befallen Ithala is a demonstration of the power the monopolies have on South Africa’s economy. File Picture: Doctor Ngcobo Independent Newspapers
Philani Mazibuko
eThekwini Municipality executive committee member, councillor Nkosenhle Madlala, has become the latest KwaZulu-Natal politician to defend the existence of Ithala SOC Limited (Ithala Bank).
Madlala, who is also the Deputy Secretary of the ANC in eThekwini Region, said the threat to close Ithala Bank “is a continuation of monopoly capital’s pushback against the transformation agenda.”
Ithala is facing a provisional liquidation application which has been brought by the SA Reserve Bank’s Prudential Authority (PA). The financial institution has now come face to face with the PA over claims of alleged insolvency and non-compliance.
Madlala’s comment comes in the wake of an announcement by the municipality that the troubles facing Ithala have led to the postponement of a partnership agreement with Ithala Development Finance Corporation (IDFC) that would have seen Small, Medium and Micro Enterprises (SMMEs) getting support to the tune of R20 million for the next three years.
In an opinion piece sent to The Mercury, Madlala said what has befallen Ithala is a demonstration of the power the “monopolies” have on South Africa’s economy.
“The announced closure of Ithala Bank is a prime example of the stranglehold monopolies have on South Africa’s economy in general, and the financial sector in particular.
“This proposed closure should be viewed not as an isolated event, but as a continuation of monopoly capital’s pushback against transformation,” said Madlala, who is also the chairperson of the Governance and Human Capital Committee.
He said Ithala is not the first government linked financial institution to be targeted.
“VBS Mutual Bank, Post Bank, and now Ithala Bank, all posed a direct threat to the dominance of the ‘Big Four’ banks. The Competition Commission has found some of these monopolies guilty of collusion and currency manipulation.
“What has not been said about this behaviour is its impact on the competition, in this instance, emerging enterprises seeking to gain a foothold in the sector,” said Madlala,
He added that the 55th National Conference of the ANC re-affirmed the resolution to establish the state bank as part of the financial sector transformation.
Madlala called for the revisiting of calls for the elevation of Post Bank to a fully-fledged bank since it already had infrastructure and a national footprint.
“The decision to start paying social grants through the Post Bank was seen as a step towards this mandate. This move starved commercial banks of billions of rand. It also does not help the situation that some of the ‘political class’ are invested in the big four banks, making the implementation of this resolution a direct threat to their financial interests,” said Madlala.
He said the fight for economic emancipation for Black people is far from over.
“Let us not allow monopoly capital pushback to gain an upper hand against transformation.”
Political analyst Prof Sipho Seepe said as long as there is no state bank, Black people would always be on the margins of the economy.
“There is no doubt that banks play a major role in the South African economy. We know that banks discriminate against Black people, to the extent that they (Black people) are subjected to higher interest rates when they apply for loans, compared to their White counterparts,” said Seepe.
Black SMMEs, Seepe said, would benefit from the establishment of state bank when they apply for credit.
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