Eddie Koch
The Post Office, the institution which once symbolised bureaucratic incompetence, could be converted into a rural bank which will stimulate a thriving small-farm economy in the countryside.
The lack of banking services in the platteland — along with soaring levels of rural crime — is fast becoming a major block to the government’s land reform programme, according to a commission set up to look into financial services in the countryside.
The department of Land Affairs last year started a pilot land redistribution programme as the first phase of an ambitious policy aiming to redistribute 30% of all arable land before the turn of the century — and to ensure that the new owners use it productively.
But banks have been withdrawing from small rural towns at a rapid rate over the last few years and organisations involved in pilot schemes around the country say the lack of rural credit and basic banking services for a new class of black farmers is fast becoming a major obstacle to effective land reform.
But now the commission established to investigate the ways in which efficient financial services can be supplied to rural areas has come up with the novel idea: the Post Office can be used to remedy the problem by providing basic banking services to small rural businesses.
“Commercial banks have a low level of outreach and service provision especially in poor rural areas, where people have to travel long distances to major towns for banking facilities,” says a report of the commission released last month.
“The transformation of the Post Office is potentially far-reaching. An expanded branch network will provide a vehicle for improved financial services to rural areas, in addition to its reponsiblity of providing a communication network and postal servies … Consideration should also be given to using post office savings accounts as a basis for providing emergency credit to poor people.”
The report notes that very little of rural peoples’ already meagre savings are retained in the rural areas of South Africa and are therefore not available to be invested in low-cost technologies, tools, livestock and other items needed for farms to grow. South Africa has the lowest savings rate among developing nations.
Another problem is the high level of rural crime. The report notes that small mobile banks or cash pay-out companies which use armoured cars to travel from one town to another have been targeted by organised gangs. The result is that the cash vans, often shadowed by a helicopter, race into town and leave immediately after dispensing their payments. No extra banking services can be offered as a result of this way of operating.
“Many small businesses in rural areas periodically need relatively small amounts of money for operating capital and other purposes. At present the fact that a family member is a pensioner may qualify them for some short-term loans, for example, access to a pension permits a credit line for tractor hire in some rural areas,” the report says.
“If the Post Office were to allow savings to qualify for leverage of short-term loans, this could be innovative in extending the modest lines of credit which people need … The parastatal Post Office system offers the developmental state a very real possibility of using the available national infrastructural base to great advantage, helping to normalise rural life, after the disruption of forced removals.”
The commissioner’s team — chaired by Helena Dolny, wife of former Housing Minister Joe Slovo — -suggests a task group be set up to investigate a range of proposals about how the Post Office can be transformed effectively into a rural development agency.
The report also recommends the Land Bank be restructured so that its current bias in favour of existing commercial farms be shifted into a support role for land-reform programmes and the financial needs of emerging black farmers.