South Africa is a step closer to establishing a state-owned bank after Gauteng Finance MEC Jacob Mamabolo yesterday announced that the due diligence report on the entity had been finalised.
Amid dominance of traditional lenders such as Standard Bank, Nedbank, FNB, Absa among others, South Africa has long mulled the idea of a state-owned bank, which could broaden financial inclusion, extending to township entrepreneurs among others, while also strengthening the economy.
The report had be handed over to the Gauteng provincial government.
“This is a major milestone that we have reached and gives the process of establishing the state bank a thumbs up. We are now in a better position to move to the next level to consult with the Premier and consult broadly with stakeholders including the Economic Development and labour,” he said.
Mamabolo said, “The legal framework and report helps us to navigate the compliance space and elaborate what the law says and paves the way forward.
“This is a critical milestone. While we are happy and pleased to reach this critical point and take the next steps, it doesn’t meant its simple and easy. There are areas in law that we have to make sure we comply with and consultations that we have to do and areas of compliance we have to take forward.
“The due diligence report clears the legal hurdles and provides Gauteng with a strong legal framework towards establishing a state-owned bank. We are now in a better position to move forward knowing very well that the work that we are doing complies with the legislation,” Mamabolo said.
It is envisaged that the state-owned bank will address current market failures by, integrating small, micro, and mid-sized businesses (SMME’s) and unserved individuals in the formal financial sector; and drive a mission of financial inclusion and security while offering a differentiated value proposition to customers whose needs are not being met by current bank offerings.
It also aims to provide tailored products including launching a streamlined, low-cost transaction product set with value-added features and expanding in future to include loan products
“We are convinced that by supporting township entrepreneurs including ensuring that they have access to tailor made financing products to expand their businesses, we will create new jobs, increase access to goods and services, and promote much-needed economic development in our communities. The state owned bank is one of the key mechanisms that can support us to grow the township economy and increase the overall contribution of Gauteng to the country’s gross domestic product,” he said.
Mastercard South Africa customer solutions vice president Shabir Ahmed recently told Business Report Recent research highlights the considerable market value of township economies, estimated at R900 billion, with approximately R150bn spent annually in cash at spaza shops alone. These contributions constitute 5.2% of South Africa’s gross domestic product and provide employment opportunities for 2.6 million individuals,
An estimated 17% of South Africa's total employment emanating from the informal economy.
State-owned pharmaceutical
Turning to the state-owned pharmaceutical company, the MEC said the legal due diligence for this entity had also been completed, and it supported the establishment of the pharmaceutical company.
The proposed solution will address, among others, institutional arrangements, supply chain management, medicine procurement, facilities, distribution of medicines to the provincial healthcare facilities, medicines inventory and dispensary to members of the public.
This process was followed by the appointment of the Advisory Panel comprising of experts in the pharmaceutical and healthcare policy from both the public and private sector with Amos Monyela as chairperson
“The role of the panel is to provide strategic guidance and advice on developing a business case for the pharmaceutical company and participating in consultations with relevant stakeholders. The Panel will serve as an important mechanism for the proper regulation and oversight of the work to be conducted and will play a critical role in providing research and development support, disseminating proper information on medicines and addressing public health problems,” he said.
MEC Mamabolo said: “In fact, we are meeting with the MEC of Health and Wellness, Nomantu Nkomo-Ralehoko and clinicians tomorrow as part of our first stakeholder consultation on the pharmaceutical company. The meeting will also be attended by Mr Amos Monyela as the Chairperson of the Advisory Panel of the pharmaceutical company.”
“We take the work of establishing both the state pharmaceutical company and the state bank very serious. That is why we appointed Senior Counsel Adv. A. Bham SC, Senior Council Ngwako H. Maenetjie SC and Senior Counsel Adv. Michelle Leroux SC to conduct due diligence work on both the state pharmaceutical company and the state bank. The total amount that we have spent on the due diligence reports is R4.1 million,” he said.
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