Lesufi’s state bank and debt scrapping promises ‘just hot air and politicking’

Gauteng premier Panyaza Lesufi has reiterated his intention to establish SA’s first provincial state bank despite criticism the existing institutions have failed to achieve their mandate.

The bank would allow people to borrow money and fund township businesses, among other functions.

Gauteng state bank

Lesufi said the process of establishing a Gauteng state bank would be an important step by the provincial government to extend access to financial services to all residents of the province, specifically those who remain largely excluded from financial services.

“The concept of a state bank is not new to South Africa. South Africa currently has several state banks, including the Development Bank of Southern Africa, the Land Bank and many other development finance institutions. The idea of a state bank is predicated on the principle of the state intervening in the economy,” said Lesufi.

Expert weighs in

Economics professor Bonke Dumisa said it would be a waste of time to start another state bank as there were already others that had failed to cater for the marginalised in society.

“They are not achieving what people want them to achieve.

“People have been making a lot of noise about the state bank. At least they are moving away from that whole thing of saying the South African Reserve Bank must become the state bank,” said Dumisa.

Process for implementation

Lesufi said Gauteng MEC for finance Jacob Mamabolo has been tasked with looking into the process that the provincial government needs to undertake to implement this resolution.

“MEC Mamabolo has appointed a legal firm that is taking care of the proposal on how the state bank will be funded, how it would run, how it would operate in our province,” he said.

Scrapping Eskom debt in Soweto

Meanwhile, on the controversial issue of scrapping the electricity debts in Soweto, which has been widely criticised, Lesufi said it would improve the living conditions in townships, informal settlements and hostels.

Soweto’s Eskom debt is around R5 billion and it is estimated that only R512 million of it would be collectible.

“You can only recover R512 million because people are unemployed and some of them are grannies,” he said. “If you cannot collect that amount of money, then what is the best mechanism?

“The mechanism is to scrap it so that we start afresh and provide the necessary support,” said Lesufi.

“In doing so, we are not encouraging those who can afford to pay not to pay. That is why we need to strengthen the user-pays principle.”

Lesufi said he was not blind to the possibility of the problem recurring and would propose to Soweto residents they commit to pay for prepaid electricity before the provincial government scrapped their debt.

“If they agree then we will be in a position to push for the total scrapping of this debt.”

Lesufi hit back at those who are against writing off Soweto’s debt, accusing them of having double standards as they did not complain when the e-toll debts were scrapped entirely in the province.

“Debt is debt, it must not have colour, it must not be about race and it must not be about where people stay. “Scrapping of the debt is to protect the poor, the old and the vulnerable,” he said.

Dumisa indicated he viewed scrapping of the electricity debt in Soweto as politicking.

“If people listen to what Lesufi said on the scrapping of electricity debt, we are going to make the whole culture of non-payment and culture of entitlement worse.

“This country cannot afford that,” he said.

ALSO READ: Soweto Eskom debt: Lesufi’s idea ‘could set dangerous precedent’ – economists

– lungam@citizen.co.za