In a recent incident, the failure of Postbank has left South African social grant recipients and pensioners in a dire situation, underscoring concerns about its suitability as a state bank. While the government attributed the problem to a “glitch” resulting from system migration, this explanation offers little solace to pensioners who depend on these funds for their survival.
Commercial Services Without Monetary Policy Control
According to Investopedia, state banks are entities that provide commercial banking services but are not involved in shaping monetary policy. Despite this definition, Postbank’s recent breakdown has prompted skepticism about its potential to serve as a successful state bank.
A Bank for Women, Youth, and People with Disabilities?
The Minister of Women, Youth, and Persons with Disabilities, Nkosazana Dlamini-Zuma, has proposed the creation of a bank specifically catering to women, youth, and individuals with disabilities. However, this idea has been met with skepticism. Rossouw dismisses the notion with a laugh, suggesting that it may not be a viable solution.
Government’s Efforts in Establishing the Bank
Dlamini-Zuma has already appointed a management committee, chaired by Dr. Thandeka Ellenson, to initiate the process in collaboration with various stakeholders. She has argued that such a bank is needed because these groups often struggle to obtain financing from existing financial institutions. Ellenson has shared that the bank is set to be operational by June the following year, having met the minimum capital requirements and membership figures.
Postbank’s History of Challenges
The recent “glitch” is not the first problem that Postbank has faced. The government has been aware of system weaknesses within the bank, and steps were supposed to be taken to address them, including holding those responsible accountable. However, no one has been held accountable for the recent incident, which caused immense hardship for pensioners who had to incur extra banking costs due to declined transactions.
Increased Irregular Expenditure
Furthermore, Postbank’s irregular expenditure increased significantly in the 2021/2022 financial year, with R118 million attributed to services obtained without contracts and non-adherence to procurement processes. The Auditor General of South Africa (AGSA) noted insufficient consequence management efforts and a lack of internal processes to deal with such matters.
Failure to Safeguard Issuing of Bank Cards
One notable irregularity was Postbank’s failure to maintain an effective internal system to safeguard the issuance of bank cards for the South African Social Security Agency, resulting in a financial loss of nearly R68.8 million due to unaccounted-for cards.
Lack of Consequence Management Measures
Remarkably, almost a year later, the department has yet to institute any consequence management measures for these lapses in governance and oversight.
Past Suspension of ATM Withdrawals
Pensioners previously found themselves without access to funds when Postbank suspended ATM withdrawals for Sassa beneficiaries in December of the previous year, citing the need to curb fraud. This move resulted in fraud involving stolen Sassa cards amounting to almost R13.6 million.
A Contentious Issue
While there have been discussions about transforming Postbank into a state bank, President Cyril Ramaphosa refrained from making any such announcement in his State of the Nation Address. Finance Minister Enoch Godongwana had previously stated that the creation of a new state bank was financially unfeasible, given the country’s budget constraints.
Concerns About Political Agendas
Independent economist Bonke Dumisa has cautioned against establishing a state bank, suggesting that it may serve the interests of a select few and be driven more by political agendas than sound financial management.
The recent failure of Postbank has raised significant doubts about its suitability as a state bank, and questions linger about the government’s intentions in pursuing this course of action. Furthermore, the proposed bank for women, youth, and individuals with disabilities faces skepticism from experts who question its viability and potential impact. As these issues continue to unfold, the future of Postbank and the broader discussion of state banks in South Africa remain subjects of considerable debate and scrutiny.