GDP stats sa

Photo: Pixabay

ANC to launch state-owned bank ‘using pension fund as capital device’

Reports have emerged that the ANC aims to launch a state-owned bank – using pension funds to fund its capital investment.

GDP stats sa

Photo: Pixabay

Reports have emerged that the African Nations Congress (ANC) has drafted a plan to launch a new state-owned bank that will have access to pension funds in order to tee the financial mechanism up with favourable rates. 

This according to the Sunday Times, who on Sunday 16 August published a report detailing the contents of a recovery plan published by the ruling party in June, wrote that the strategy entails a scaled effort to invest in state infrastructure, as well as establish a springboard for a new state bank to emerge that will be a “properly capitalised and governed state bank [that] will be accelerated”.

State bank to ‘play critical role in banking sector competition’

The Sunday Times report outlines a proposal document that appeared in the ANC’s economic recovery plan which was devised during meetings between the National Executive Committee last month and states that the party has ambitions of starting its own state-owned bank, as well as making amendments to pension fund regulations.

“Processes, already under way, to establish a properly capitalised and governed state bank will be accelerated,” the document says – according to the national newspaper.

“The state bank will be able to access different forms of capital, in addition to taking deposits. [It] has a critical role to play in deepening financial inclusion and to further enhance competition in the banking sector.”

Longstanding scepticism has endured over the ANC’s ability to manufacture a structure that would allow for the instigation of a state-owned financial institution, especially when considering the risk posed by the pension fund industry’s vulnerability of erosion of value if retirement funds were to be forced to invest in projects managed by the government and state-owned entities.

Pension fund to be utilised in ANC state bank structure  

The report published today provides no detail of how much leg-work has gone into the allegedly proposed plan, but said that the ANC’s ambition is to kickstart job creation by leveraging pension funds for extra resources to be utilised by planning committees tasked with establishing the fiscal mechanism. 

“Regulation 28 of the Pension Funds Act will be amended in order to unlock the funding of long-term infrastructure projects and high-impact capital projects, and the amendment will facilitate direct access to pension funds’ pool of resources by state development finance institutions,” the document says.

“Ultimately the end goal is to support economic recovery and build a new fast-growing, inclusive economy buttressed by a massive infrastructure roll-out programme that supports reindustrialisation through localisation, changes the structure of the economy, builds climate resilience, creates jobs, and enhances productivity while building a critical base for the export market with a specific focus on the African continent.”

‘Government must outline plan’ – Nedlac  

Business Unity SA and Nedlac member Martin Kingston said that the project is well on its way to being introduced as a prioritised plan outlined by the South African government, however he said that the ruling party needs to announce its intentions expediently. 

“Government needs to demonstrate the political will to give effect to those reforms on an expedited basis,” he said. 

“Patience is wearing thin on the part of many stakeholders. The providers of capital have multiple demands from other countries, and we can’t afford to be last in the queue.”

“Our economy is on its knees and millions of jobs are at risk,” the labour submission said.

He said that in light of the fact that the country is currently experiencing a proverbial period of financial cardiogenic shock, the government needs to act urgently. 

“We simply cannot afford to delay our response to the economic crisis a day longer,” it said, calling unemployment “a ticking time bomb that threatens our very survival”.