6 - Green light for Postbank South Africa

0:00Green light for post-bank South Africa by Elisa Barwick. The government of South Africa announced on 13 March that its post-office banking plan is a big step closer to reality. The country's post-bank was granted a financial services provider license by the financial sector conduct authority, allowing it to expand its range of financial services and products. This brings the push for a fully fledged state bank operating through post-offices into the final stage of a five-year strategy. To operate at full capacity and on a national scale, post-bank must now get a full commercial banking license from a South African reserve bank. South Africa has had a postal bank since 1875, but it can only carry out very basic transactions such as deposits and withdrawals. Some 6.5 million South African citizens remained unbanked, 15 million underbanked, and small medium enterprises seeking loans have been sidelined, according to post-bank.

1:03The country's governing party, the African National Congress ANC, began its push for a state bank in 2010, and party conferences since, have passed resolutions restating the Pledge 4, quote, establishment of a full-of-fledged state bank to deepen economic transformation in our country, said an ANC statement issued when the license was approved. The purpose of the bank, said the government, is to deepen financial inclusion and transform the banking sector, especially this year, the year of decisive action to transform the economy. A state bank, the statement read, is a strategic instrument of an ethical, capable and developmental state. Economic transformation is the government's priority and the bank is, quote, a decisive step towards a people-centred financial system that advances dignity inclusion and shared prosperity. End quote. Over recent years, the push to transform the bank into a powerful instrument of the state

2:03has been motivated by the desperate need to restore infrastructure and services. Government officials have stated unequivocally that without achieving control of finance, future planning will always be stunted. Some have pushed the Chinese model of using state banks to finance development. President Cyril Ramaphosa has posited post-bank as a means of ending the domination of banking by a handful of large and risk-averse commercial banks. Staged victory. Reaching this stage has been no small feat. The existing postal bank had to be split off from the post-office because the South African Reserve Bank cannot grant a full banking license to an entity that is not financially sound, as was the case for the post-office. With the agency struggling, the government took over the post-office holding in the bank. Legislation that prevented state-owned entities from being eligible to apply for registration as a bank also had to be changed. The government fought for this amid intense opposition, including from the finance sector.

3:08Some government ministers were less than enthusiastic about the move, and Reserve Bank Governor LeSetja Kaganjago sided with the big banks, which asserted that post-bank is not up to the task. In February 2024, the legislation required to establish the bank, which had passed in late 2023, came into effect and licensing applications commenced. Post-bank has now met the strict regulatory requirements to become licensed. Calling post-bank a strategic instrument of economic transformation, the ANC study group on communications and digital technologies, a parliamentary caucus, praised the milestone achieved by the bank, recognizing the pivotal role of the CEO of post-bank Mizniki-Bengash. Its statement declared, quote, This win represents a fundamental shift in post-bank's role from a limited participation in the banking sector to actively guiding citizens in navigating their financial lives, particularly those marginalized underbanked and underserved by monopolistic commercial

4:09banks. And quote,