Challenged: IFP leader Velenkosini Hlabisa
The Inkatha Freedom Party has slammed the decision by the South Africa Reserve Bank’s Prudential Authority to file for the liquidation of Ithala Bank SOC as ill-advised and said it would “take to the streets” to oppose the move.
“The IFP strongly objects to this decision and we will stop at nothing to defend Ithala Bank, because Ithala Bank is the backbone of the black economy,” IFP president Velenkosini Hlabisa told a media briefing on Monday at the launch of year-long celebrations to mark the party’s 50th anniversary.
He said the party would be at the Pietermaritzburg high court this week — alongside the KwaZulu-Natal provincial government — to support Ithala’s opposition to an application by the Prudential Authority for provisional liquidation of the entity.
“We will not allow Ithala Bank to suffer the same fate as VBS and African Bank,” the IFP president added, referring to the VBS Mutual Bank in Limpopo which was looted of R2 billion of depositors’ money by its executives from 2015 to 2017 using fraudulent accounting practices. It was placed under liquidation in 2018.
A new African Bank was launched in 2016 after the original entity was placed under curatorship in 2014 following its collapse under the weight of bad debts.
Ithala is a subsidiary of the province’s Ithala Development Finance Corporation, which falls under the economic development and tourism ministry and has been providing development finance to small and medium enterprises for more than 30 years.
It provides banking, insurance and other services to thousands of residents of rural KwaZulu-Natal, school feeding cooperatives and stokvels in small towns in which the commercial banks do not operate.
Ithala has been battling to survive after the Prudential Authority in 2023 refused to extend an exemption which allowed it to perform certain banking functions.
On 16 January, the authority, which is responsible for the prudential regulation of banks and insurance companies within the Reserve Bank, said it had applied to the Pietermaritzburg high court for the provisional liquidation of Ithala SOC, insisting this was in the “best interests of the approximately 257 000 depositors of Ithala, as the appointed liquidator will be able to utilise insolvency legislation to recover and distribute their funds to the extent possible”.
The matter is set to be heard on Thursday.
“It is clear that there is a strategic and deliberate effort to consolidate the major banks by collapsing black banks. We will take to the streets in defence of Ithala Bank,” Hlabisa told journalists at Monday’s briefing.
Expropriation Act
He also said that the IFP rejected the decision by President Cyril Ramaphosa to sign the Expropriation Bill into law without engaging partners in the national coalition government.
The Democratic Alliance (DA) and trade union Solidarity have threatened to go to court over the bill. At the weekend, DA leader John Steenhuisen said he had written to Ramaphosa objecting “in the strongest terms” to the signing of what he called an unconstitutional Act.
Public Works Minister Dean Macpherson, who is a DA deployee to Ramaphosa’s cabinet, posted on social media that the policy of expropriation without compensation as espoused in the new law would not be implemented “under my watch”.
“As the IFP, we have consistently maintained our principled opposition to the current version of the Expropriation Bill. While we support meaningful land reform that is just, equitable and aimed at addressing historical injustices, the Expropriation Bill falls short of these principles,” Hlabisa said on Monday.
“This Bill is on a collision course with the Ingonyama Trust and this reality hardens our opposition to the Bill.”
The Ingonyama Trust collects millions of rand annually from mines, commercial farms and other business operating on its land, which is meant to benefit the Zulu king, amakosi and the communities under their leadership in KwaZulu-Natal. The IFP is a staunch supporter of the monarchy.
The Ingonyama Trust’s board administers nearly 3 million hectares of land in the province, which falls under traditional authorities, on behalf of the king.