The government has completed a feasibility study for a state-owned bank, Finance Minister Tito Mboweni revealed on Monday.
Writing on Twitter, Mboweni said Deputy Finance Minister David Masondo is leading the process towards the state bank’s formation.
‘Next steps soon’
“Finance capital is fundamental to economic transformation in this country and everywhere. So, Dr David Masondo … has been allocated the task of leading the formation of the SA State Bank. Feasibility study done. Next steps soon. Very key to economic transformation!” he wrote.
The Minister also suggested that the bank will play a key role in South Africa’s economic reconstruction and recovery plan announced by President Cyril Ramaphosa in October.
“At the most innermost element of our Economic Reconstruction and Recovery Program is Finance capital.
“Otherwise, how are you going to finance all these elements of the plan. Going to church to pray? No! Finance capital is fundamental,” he explained in another tweet.
Ramaphosa first announced plans to establish a state bank in his State of the Nation Address (SONA) in February this year.
He said, “We are also proceeding with the establishment of a state bank as part of our effort to extend access to financial services to all South Africans.”
Mboweni gave further details on how the bank will be structured during his budget speech in February, saying it will operate as a retail bank on commercial principles.
“The state bank will be subject to the Banks Act, and will have an appropriate capital structure and performance parameters on investments and loan impairments. It will be regulated by the Prudential Authority on its own merits,” he said.
Parliament passed the Financial Matters Amendment Bill in March last year. It allows state-owned enterprises to apply for banking licences.
Ramaphosa signed the bill into law in May 2019, paving the way for the establishment of a state bank.