Government is ready to establish a state bank, Finance Minister Tito Mboweni said on Wednesday.
“In July 2019, I tasked the Deputy Minister of Finance with the responsibility to undertake the state bank project… I am pleased to inform the House that preferred options for the establishment of a bank are now ready,” he said in Parliament, as he tabled the 2020 Budget Speech.
The Minister’s comments come after Parliament last year passed legislation to allow state-owned enterprises to apply for banking licenses.
The architecture of the proposed bank will be that of a retail bank operating on commercial principles.
The bank will be subjected to the Banks Act, and will have an appropriate capital structure and performance parameters on investments and loan impairments.
“It will be regulated by the Prudential Authority on its own merits. We will also consolidate the currently fragmented system of national and provincial Development Finance Institutions,” he said.
The PA is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures.
SA Sovereign Wealth Fund
Meanwhile, Mboweni also announced the formation of the South African Sovereign Wealth Fund.
The fund is an important long-term tool for saving and investment for future generations.
“Today, we announce the formation of the South African Sovereign Wealth Fund with a target capital amount of about R30 billion, which converts to about US$2 billion or so. Given the legal, administrative and procedural issues involved, a relevant bill will be submitted during the course of this Parliament,” he said.
He said the fund could also contribute to strengthening the fiscal framework, and could also play an important role as a counter-cyclical fiscal tool.
The Minister said there are a variety of possible funding sources, such as the proceeds of spectrum allocation, petroleum, gas or minerals rights royalties, the sale of non-core assets, and future fiscal surpluses, among others.
“This will ensure that we continue to invest in the future generations of this country in a fiscally-prudent manner,” he said. – SAnews.gov.za
