DA calls for Economic Impact Assessment on Post Bank Amendment Bill

Issued by Dianne Kohler Barnard MP – DA Shadow Minister of Communications
24 Oct 2022 in News

Please find attached soundbite by Dianne Kohler Barnard MP

The Democratic Alliance will be submitting a formal request to the Socio-Economic Impact Assessment Unit (SEIAU) in the presidency asking for a risk assessment on the impact of the new Post Bank Amendment Bill, which is currently before Parliament. This Bill should be put on hold until this assessment is done, as the committee is currently trying to steamroll it through parliament.

Tomorrow, 25 October, the Portfolio Committee of Communications and Digital Technologies will engage in public hearings on the problematic Post Bank Amendment Bill. The lack of interest or knowledge of the Bill is however concerning, with only a single comment received, in spite of numerous phone calls made to entities to provide input .

This section 75 Bill aims to bring in a bank controlling company as the sole owner of the bank, rather than The South African Post Office, which considering its truly dreadful financial status, shouldn’t be a bad thing. However, this can only be seen as a back-door creation of a State Bank, following swiftly on the heels of the attempt to take over the Reserve Bank.

Not only will this Bill incur unnecessary costs as well as a substantial burden on the fiscus, but there is also no guarantee that this bank will have the required financial backing. It has all the markings of another failed State Owned Enterprise.

The main financial implications of the Bill are predicted to be in the form of an entirely new board, CEO, CFO and ancillary positions and committees. Most worryingly, we have yet to have sight of a feasibility study on whether the new state-owned entity will function effectively and profitably or whether it will be another massive burden to the state. Yet the Committee is scheduled to move ahead with hearings and deliberations.

The DA is concerned with the Bill for the following reasons:

  • There is no rationale provided for the Bill relating to the need for a state-controlled bank as far as it responds to a market failure.
  • The bank will extend credit to high-risk profile individuals or institutions without incorporating the necessary safeguards to match the risk profile
  • There is no separation of powers between the Minister and the Board.
  • The board of the bank-controlled company is de facto the board of the bank company.

There is no doubt that should the above occur, this bank will inevitably become another failed, unsustainable state-owned entity which will need government bailouts.

In the event of it collapsing, it will in the end be the Treasury who has to bail yet another SOE. This Post Bank Bill is a mere strategy by the ANC to avoid the strict regulations required for a banking license with the reserve bank.

Did we learn nothing from the VBS debacle?

The Democratic Alliance strongly opposes this bill, which must be put on hold until these serious concerns are addressed, and a social impact assessment by the DPME has been completed .