Many ANC leaders that are demanding the implementation of the state-owned bank resolution might not use the bank as they believe private institutions are more efficient than public entities, which they lead.
This was the sentiment of ANC KwaZulu-Natal secretary Bheki Mtolo, who said the inefficiency of the government institutions had already led to the state-owned Land Bank losing clients to Standard Bank.
Mtolo was addressing delegates, mostly ANC leadership, at a party workshop on the implementation of the much-anticipated South African Postbank Limited Amendment Bill which, if passed, would lead to the establishment of the 100% government-owned bank.
He said the commercial banks were not worried about the implementation of the state-owned bank as it would not match their competency.
He was concerned that among more than 200 people at the workshop, only three said they had used Postbank in the past three years.
“Everyone is looking at state bank and saying I support it. Nedbank (an example) is saying I support this idea but deep inside it is saying it won’t work.
“It is saying it won’t compete with us,” said Mtolo.
He said the issue of efficiency at state-owned entities was a critical issue that the ANC should face and deal with.
“Even you inside here, if you want to buy houses you will go to a state bank, and the state bank will take two months.
“You come to us (commercial banks), and in three days we give you the loan, (then) Nedbank (an example) knows that you won’t use the state bank,” he said.
Land Bank’s spokesperson Promise Ribane acknowledged the bank’s shortcomings which she said were caused by facing debt default between 2020 and late 2022.
“The Bank had halted its new lending activities to both its existing and new clients. During this period, clients sought financing from other financial institutions to enable continued farming operations, and as such they had to move their accounts to other Banks that were able to provide financing for their needs,” said Ribane.
She said the bank has since commenced lending activities “following the launch of the Blended Finance Scheme supported through the Department of Agriculture, Land Reform and Rura Development in October 2022.”
“To this end an improvement plan is currently being implemented by the Bank [and] the improvement process is not a once-off exercise and the Bank will continue to explore new measures to improve the loan origination process.
“Provided that all required information is available, an initial assessment could take 4 to 5 days to decide if the application is declined or may proceed to the due diligence stage.
Assuming that the Bank has received all the relevant information and documents, and dependent on the complexity of the transaction a credit decision may be obtained within a week or up to three months from the time the due diligence process is initiated,” she said.
Mtolo also said the Land Bank’s under-performance, which he said, led to more than 70 farmers, “even white farmers”, no longer using the bank.
“Most of their (farmers) funders is the Standard Bank because you go to these guys (Land Bank), and they will give you a loan six months or seven months later,” he said.
He said the Land Bank needed to catch up with the demands of the farming industry.
“If you (a farmer) realise that the price of fertiliser has increased, you must get a loan now (but) these guys (Land Bank) would give you a loan after the planting season is gone.
“Then they (farmers) just walk to Standard Bank, and in three days the loan is approved; if it is declined it is declined, at least you know your position.
“Now you apply (to Land Bank), you want to do planting around August, you will only get the loan (from Land Bank) in January or the end of October, which is too late,” said Mtolo.
However, Dr Simbarashe Tembo, of the University of KwaZulu-Natal’s law faculty, said many people did not use Postbank because, under the current SA Postbank Limited Act of 2010, it was not operating as a fully fledged bank as it was a subsidiary of the Post Office.
“So the Post Bank currently functions as a deposit bank and not as a full bank, which probably explains why only three people out of the many of us here have used the Postbank in the past three years,” he said.
Speaking in his personal capacity, Nedbank’s KwaZulu-Natal executive for commercial property finance, Aubrey Shabane, commended commercial banks’ efficiency when it comes to customer service.
During the discussion, Shabane also brought up his past experience as a former employee of a government department, state-owned entity and state-owned financial institution. He said when he worked for the public sector – he did not mention which one – “we really took six months a year going through an application because of how things were”.
“Where I am now, we can give an approval within six weeks, done, R250 million signed,” he said.
Shabene suggested that experts should meet to discuss how the state bank should be shaped to make it productive as “there are many chances that it (state-owned bank) might not work”.
He said while the government is good at forming policies, “it is terrible with implementation”.
Shabane cautioned that the appointment of executives, including board members, should be carefully considered because “the beautiful thing can collapse because we made the wrong choice”.
He recommended that the SA Reserve Bank should take charge of the appointment of people to critical positions, including the CEO.
“That would ensure control and give confidence to a person who deposits the money that the people who are running the bank are appropriate.
“Right now, we (state entities) appoint our people, and there is no one who would say ‘is the person we are appointing the right one?”
Shabane also called for a partnership between the state bank and commercial banks.
“We can partner to ensure that a black person gets funds otherwise it would take thousand years before a black person can raise sufficient equity to be able to contribute (to a) big project,” said Shabane.
ANC provincial deputy chairperson Nomagugu Simelane said the Reserve Bank should not regulate the state bank the way it regulated commercial banks.