Cape Town - Outgoing SA Communist Party (SACP) general secretary Blade Nzimande has launched a scathing attack on South Africa’s four main banks and the financial sector as a whole, accusing the whole system of being behind a “neo-liberal, financialised state capture”.
Nzimande, who was speaking at the start of the SACP’s congress in Boksburg, said that while the legacy of colonialism, apartheid and endemic corruption were major factors in the country’s problems, banks and the financial sector had become the major drivers of the deepening socio-economic crisis confronting the majority of South Africans.
Nzimande took the banks to task over the 2020 Covid-19 Loan Guarantee Scheme with which the government attempted to assist businesses in distress as a consequence of the pandemic lockdown.
It is common knowledge that Standard Bank, Absa, Nedbank and FNB are the country’s biggest banks.
He said what happened with the scheme was a dramatic illustration of the class arrogance and hegemony of finance capital. He said that in response to the lock-down recession, the SA Reserve Bank (SARB) had already injected money into the financial sector through the purchase of bonds on the secondary market.
“At the same time the government made available a potential R200 billion to the same banks in terms of a Covid-19 Loan Guarantee Scheme to assist businesses in distress. Only R18.4bn was dispensed by the banks to businesses in distress.”
He said small and medium enterprises were particularly badly affected by the pandemic but the banks insisted on applicants for the loans placing at risk as collateral their entire businesses despite the fact that the government was carrying the burden of the risk.
He quoted former finance minister Tito Mboweni who said in a speech in May this year: “That national guarantee scheme was designed in such a way as 94% of the risk was to be absorbed by the National Treasury and the SA Reserve Bank. But the banks didn’t come to the party.”
Mboweni, who made the remarks after he had left office, said the banks simply refused to play ball despite pleas from President Cyril Ramaphosa.
Contacted for comment on the issue, the Banking Association of South Africa (Basa), which was in charge of the scheme on behalf of the banks, all of which are members, pointed the Cape Argus to the last statement it made on the scheme in June 2021.
In the statement, Basa said: “As at June 19, 2021, R18.3bn in loans had been approved by banks and taken up by small businesses under the Covid19 Loan Guarantee Scheme.”
Basa said in the statement that demand for the scheme had dropped sharply since April 2021, and in the past month only 65 loans, with a value of R35.7 million, had been approved by banks. The scheme was closed in July 2021.
In his speech, Nzimande said that through the late 1990s and into the present, South Africa’s political economy had become highly financialised.
“In 1994, the financial services sector in South Africa contributed 6.5% to GDP. It currently contributes nearly 25%, while the contribution of productive sectors to the economy has shrunk relatively with, among other things, de-industrialisation.”
Nzimande said that both black and white class representatives of the financial services sector were now clearly the hegemonic force within the capitalist class.
Speaking of what he referred to as the banking oligopoly, he said: “When the government seeks a social compact with so-called social partners, it is the financial sector that assumes the role of speaking for business at large.”
He said the dominance had been further cemented by the revolving door of senior personnel who moved seamlessly from the National Treasury to the SARB and the private banking and investment oligopolies.