The minister was speaking at the 9th BRICS Youth Summit in Durban on Tuesday which brought youth from Brazil, Russia, India, China and South Africa together to share ideas.
Dr Nkosazana Dlamini Zuma, the South African minister responsible for women, youth and people living with disabilities says the banks are only looking after the interests of the few, and neglecting the development needs of the country.
The minister was speaking at the 9th BRICS Youth Summit in Durban on Tuesday which brought youth from Brazil, Russia, India, China and South Africa together to share ideas.
The conduct of South African banks has once again come under fire for their conduct, their alleged bias, and their anti-competitive behaviour.
Dr Nkosazana Dlamini Zuma, the South African minister responsible for women, youth and people living with disabilities says the banks are only looking after the interests of the few, and neglecting the development needs of the country.
The minister was speaking at the 9th BRICS Youth Summit in Durban on Tuesday which brought youth from Brazil, Russia, India, China and South Africa together to share ideas.
The summit is part of a series of events hosted by Durban ahead of the BRICS Summit scheduled for August in Johannesburg.
Addressing the gathering, Dlamini Zuma said the issue of banking cartels is both a global and local problem.
“Finally, I expect your summit to re-imagine an Alternative Banking and Financing Architecture for the global south.
“Productive societies require productive sectors of the economy, industrialised around manufactured finished goods and away from the shipping of raw materials,” she said
“We currently have a structural problem of a banking industry that is not only greatly concentrated and monopolised, but also in many ways does not serve our interests,” she said.
She was emphatic that those who prefer shipping raw materials from other countries will not fund the building of manufacturing plants, they will not fund a rail system that connects the content for the movement of people, goods and services.
“We need an alternative public banking and finance system beyond the dominant one, and we need it urgently.
“The New Development Bank is thus a step in the right direction but we need to domesticate alternative banking as a matter of urgency,” she said.
She added that the country is having serious challenges with the big five banks that have dominated the banking arena for years.
“For example, in South Africa we are forced to kneel before five banks.
“This represents some of the most concentrated banking systems in the world.
“The greater concentration of banking to the Big 5 has clearly undermined accountability, hindered development, stifled competition and passed on the cost burden to citizens,” she said.
She said without control over the banking system, only a few will be funded for their projects while the rest would be left out.
“Without control over finance and banking, only those projects that converge with the interest of private interests will be funded while the interests of the communities we serve take a back seat.”
Political analyst, Professor Sipho Seepe agreed with Dlamini Zuma, saying the conduct of local banks mirrors those of their counterparts at the global level.
He said they are very selective in what they fund, snubbing developmental goals.
“The banks are driven by profits and we don’t own the banks, they are owned by people who had a hand in our oppression and our subjugation.
“We should not be surprised those that will not work in our interest,” he said.
Seepe said local banks have been exploitative when it comes to African people and that is very glaring.
“Local banks have been exploitative when it comes to African people, there are reports that their interest rates are very different when it comes to black and white people.
“For as long as we don’t have our own banks we will continue to be saddled by this. Actually, the calls for a state bank is precisely for that reason.”
However, a Durban-based independent economic analyst, Professor Bonke Dumisa, said the minister was purely being political in her speech. According to Dumisa, banks have an obligation to the depositors to safeguard their money and their obligation extends to the economy as impairment also harms the economy.
He added that the issue of banks demanding high collateral before they could finance the development needs of the country could be addressed by giving title deeds in rural areas.
“The issue with commercial banks is that they have an obligation to be very prudent when giving out loans so that depositors' money is safe.
“The most common complaint against banks, by SMMEs in particular is they demand high collaterals from people who live in rural areas.
“Those are political decisions that have to be taken and sort out the issue of title deeds so that people living in former Bantustans can have title deeds and use them to access funding,” Dumisa said.
He added that the risk of giving out loans without collateral is that they result in high impairments which do not only harm the banks, but they harm the entire economy.
“It was against that background that VBS was closed down and that can happen again with other banks as we have seen it happening in the United States recently.”
South African banks have been dragged to the Equality Court and picketed against for allegedly being racist and discriminatory, especially against black-owned businesses.
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