LIQUIDATION OF ITHALA BANK @KASIBCNEWS
The Economic Freedom Fighters (EFF) strongly condemns the decision of the South African Reserve Bank (SARB) Prudential Authority (PA) to apply for the liquidation of Ithala SOC Limited.
The EFF further condemns the failure of the National Treasury to step in and support Ithala SOC Limited in obtaining a banking license, thereby allowing its liquidation. South Africa’s banking sector remains dominated by white people, who control more than 90% of banking assets.
This concentration of control has been one of the greatest stumbling blocks to the transformation of South Africa’s economy. While the banks exercise unfettered control over the lives of black people, they play an active role in preventing any form of economic transformation and black ownership. Ithala SOC Limited is one of the few financial institutions owned by black people and has been under consistent attack by the SARB.
The SARB has demonstrated no interest in fostering transformation or ensuring the meaningful participation of black people in the economy as owners. Instead, it has shown intent to eliminate any form of ownership that does not align with the control of Stellenbosch-linked interests. They started with VBS, and now they have turned their sights on Ithala SOC Limited. The EFF is not surprised that the neoliberal grand coalition has folded its arms and allowed a financial institution owned by the state and the people of KwaZulu-Natal to face liquidation.
The ANC is complicit in frustrating and preventing the transformation of South Africa’s economy and continues to fail in eradicating poverty, unemployment, and inequality.
We are disturbed by the fact that the SARB consistently intervenes to save banks and financial institutions owned and controlled by white people, while being too quick to take harsh steps aimed at shutting down black-owned institutions. Despite black people holding no meaningful stake in the financial sector, the SARB’s punitive measures disproportionately target black-led financial institutions, something which they are not ashamed of and are ready to defend.
The Minister of Finance, Enoch Godongwana, has failed to intervene and assist Ithala SOC Limited because he, too, lacks interest in driving transformation. The National Treasury, under the coalition of the DA and the ANC, has been relentless in reversing the limited transformation gains made over the past 30 years. The deliberate failure of the National Treasury and the KwaZulu-Natal Provincial Government to support Ithala SOC Limited in obtaining a banking license is yet another indication of the neoliberal government’s opposition to alternative financial institutions. Additionally, the National Treasury’s last-minute announcement that it will “protect depositors” is both disingenuous and hypocritical.
This statement demonstrates that there is indeed capacity to intervene in the affairs of Ithala SOC Limited in a manner that protects depositors, but the National Treasury deliberately chose not to act until the bank was on the brink of collapse. This calculated delay shows that they hoped for Ithala’s failure, seizing this opportunity to dismantle one of the few black-owned financial institutions in South Africa. Their actions are nothing but a betrayal of the mandate to transform the financial sector.
The EFF is extremely concerned about the impact the closure of Ithala SOC Limited will have on the elderly and working-class people in rural areas who relied on the bank to access their pensions and wages. The closure will increase the cost of accessing financial services for these vulnerable groups, while also making worse financial exclusion by leaving more people without access to banking facilities and financial services.
This will deepen economic inequalities and further marginalise already vulnerable communities. Furthermore, the SARB has a legislative imperative to drive the transformation of the economy. The SARB possesses regulatory tools and instruments that could address the unsustainable concentration of capital and banking assets in the hands of a small minority—predominantly white men. Yet, the SARB has deliberately failed to use these tools to encourage equitable economic transformation. Instead, it actively protects the status quo, allowing the persistence of economic inequality and exclusion.
The EFF unequivocally rejects the actions of the SARB, the National Treasury, and the ANC-led government. We demand immediate intervention to protect Ithala SOC Bank and call for the SARB to fulfil its legislative duty to transform South Africa’s financial sector to serve the interests of the majority, not just a privileged few. The long-term solution to the challenges facing South Africa’s financial sector lies in the establishment of state-owned banks with a clear mandate to drive the transformation of South Africa’s economy.
These banks must prioritise the allocation of capital toward investments in productive sectors that create jobs, stimulate industrialisation, and promote inclusive economic growth. Additionally, state-owned banks should address the socio-economic challenges confronting South Africa, including financial exclusion, poverty, and inequality, by ensuring access to affordable financial services for marginalised communities. By operating with a developmental agenda, state-owned banks can play a pivotal role in building an equitable and resilient economy that serves the interests of the majority.
