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Zuma blames top four banks for controlling economy

Feb 10 2017 09:06
Matthew le Cordeur and Liesl Peyper

Cape Town – President Jacob Zuma on Friday blamed South Africa’s top four banks for controlling the economy, hours after his State of the Nation Address (SONA) in Parliament.

“If you have got four banks - major ones - and they take everything; they don’t want you to do anything,” he said on SABC’s Morning Live, which is sponsored by Gupta-owned newspaper, The New Age.

Zuma said banks often treated poor black people unfairly due to their lack of collateral. “The time has come: we should be able to deal with the economy at a fair level,” he said.

The top four banks are Absa, Standard Bank, FNB and Nedbank.

“We actually frustrate our economy deliberately by making only a few people control the economy,” he said.

“I am told by those who do business that at times they even take your ideas and implement them because they have got the money.

“At the heart of the economy is finance,” he said. “If the… critical banks that dominate everything are just four… in all countries where the economy is developed, the banks are all over because it is the finances that make the economy grow.

“We want to change this,” he said. “If you have four banks, let us have more banks. Let us share that. Let us unpack the economy and give opportunities to everyone.

“There’s a skewed kind of economic control,” he said. “We say that we must be part of owning, managing and be part of controlling the economy.

“You can’t have somebody who is super rich and have somebody who is super hungry in one country,” he said.

“As a government, we have a responsibility if we are to have the harmony, if we are to have the reconciliation. We should close the gap, not create a situation where others are going to be poor or that we change this.”

The vision for a much stronger state-controlled South African economy took centre stage in Zuma’s 2017 SONA.

The most controversial plan was perhaps Zuma’s mention of new draft legislation that will target the highly concentrated areas of the economy.

Although Zuma didn’t go into detail, it can be assumed he meant South Africa’s financial services sector, which will soon be the subject of a round of public hearings in Parliament where a number of stakeholders will provide input on how they see the sector being transformed.

The proposed legislation, which Zuma said would help “de-concentrate” certain sectors, will be drafted by the Department of Economic Development and will soon make its way to Cabinet and Parliament for deliberation.

A recommendation in September 2016 by Zuma’s inter-ministerial committee that looked into the top four banks’ decision to blacklist Gupta-owned companies was released erroneously as a done deal by Mineral Resources Minister Mosebenzi Zwane last year. While Zuma rebuked Zwane for the release of the recommendation (saying it was not sanctioned), the banking sector was able to see what might be coming their way.

Zwane said a judicial inquiry should look into the establishment of a state bank of South Africa with the possible corporatisation of the Postbank being considered as an option.

“Evidence presented to the IMC (inter-ministerial committee) suggested that all of South Africa’s economic power vests in the hands of very specific institutions, institutions who have shown that their ability to act unilaterally is within their mandate and is protected,” said Zwane. “These institutions are owned by private shareholders and report to National Treasury who in turn do not need to act on information provided to it.”

Fin24 reported on January 31 2017 that the South African Post Office (Sapo) is expected to submit an application to have its financial services unit registered as a bank by mid-2017.

Sapo will submit an application to register Postbank as a bank by July 3, a document handed out in Parliament showed in January.

Sapo CEO Mark Barnes said the Post Office has R2.7bn in capital, and retained earnings at the end of December 2016 sufficient to meet the regulatory requirements.

In July last year, the South African Reserve Bank approved Sapo’s first-level application for a banking licence for Postbank.

Read Fin24's top stories trending on Twitter:

sona 2017  |  jacob zuma  |  banks  |  economy
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