Taxi owners are calling for the government to rescue Ithala Bank from liquidation as it has sustained their business for decades. Picture: Armand Hough / Independent Newspapers
THE liquidation of Ithala Bank will be a great loss to more than 4 000 emerging black farmers in KwaZulu-Natal, who solely depend on it to finance their agricultural business as major commercial banks are isolating them, said the Black Farmers Association of South Africa (BFASA).
BFASA weighed in on the matter as all eyes were on the Pietermaritzburg High Court, which is expected to deliberate next week on applications filed last week to determine the fate of Ithala Bank, which is facing the danger of being liquidated.
BFASA president Dr Xolile Mtshagi called on the government to protect the “asset (bank) of the black farmers” from liquidation.
“Black farmers are already in the red because no one wants to finance us because if you are black asking for finance, they (commercial banks) want you to show your income statement and the value of your assets whereas there is no black farmer who has those things,” he said.
He said Ithala was established to support disadvantaged people, including farmers.
“It is going to be a great loss and the government should do something about this,” said Mtshagi.
He called on political parties in the Government of National Unity (GNU) to set aside their differences “and think of a black child”.
“Our people are going to be very disadvantaged. We have discussed this matter and we might embark on a march against the liquidation.
“If the government does not step in to rescue the bank, we will be left with no other option but to embark on a march,” said Mshagi.
The South African Reserve Bank (SARB)’s Prudential Authority (PA) shocked employees and depositors of Ithala when it announced on January 16 that it would approach the court for the provisional liquidation of the bank.
Shortly thereafter, the bank also approached the same court with an urgent application for an interdict against the freezing of the transaction, which prevented depositors from withdrawing their funds using cards.
The PA matter has been set down for January 30 while the one filed by the bank would be held on January 28.
The situation had caused an outburst from various political parties, labour unions, and the provincial government, which this week pledged support for the only state bank, which provides financial assistance to black-owned emerging businesses.
Minibus taxi owners who benefited for years from Ithala’s financial assistance have this week also weighed in on the matter, calling for the government to swiftly intervene.
South African National Taxi Council (SANTACO)’s KwaZulu-Natal office manager Sfiso Shangase said the PA’s move shocked the council, whose members have been financed by the bank to buy minibus taxis.
“We are not happy about this situation because Ithala has played a huge role to the taxi business for many years. Almost all taxi associations have their monies invested with the bank,” he said.
Shangase said on hearing about the liquidation, taxi owners panicked in fear for the well-being of their investments.
“There should be a government intervention that would make the bank continue operating.
“Most of them (taxi operators) bought cars (taxis) out of loans from the bank, others use other products offered by the bank such as insurance policies and funeral covers as an affordable price.
“The announcement shocked us because we were not expecting it based on its long history of being closer to the government and people,” said Shangase.
He said although there were commercial banks, taxi owners found it convenient to use Ithala because of its low interest and its proximity to the rural communities.
“If push comes, we can move to other banks, but you will find that there are rural areas such as uMhlabuyalingana and Jozini (far north of KwaZulu-Natal) that do not have branches of commercial banks.
“Without Ithala, people from those areas would be forced to travel long distances to find a bank,” said Shangase.
The National Education, Health and Allied Workers’ Union (NEHAWU) in KwaZulu-Natal was mainly concerned about the plight of more than 400 employees of the bank, whose jobs are on the line.
“As NEHAWU, we remain resolute in defence of not only our members but workers in general.
“We will continue to wage a relentless struggle to protect the interest of workers and vulnerable communities,” said union provincial secretary Ayanda Zulu in a statement.
2023 - ABSA terminated a deal to supply Ithala with a banking facility.
July 2024 - The Financial Sector Conduct Authority (FSCA) suspended Ithala’s license pending compliance with banking regulations.
January 16 - South African Reserve Bank (SARB)’s Prudential Authority released a shocking statement that it had filed papers in the Pietermaritzburg High Court for provisional liquidation of Ithala SOC Limited.
January 16 - The National Treasury issued a statement promising to help Ithala depositors find alternative banking arrangements.
January 17 - Some of the approximately 257 000 depositors of Ithala woke up in the early hours of the morning to rush to the nearest branches to find out about the safety of their deposit only to be told that those using bank cards could not withdraw.
January 17 - Ithala lawyers approached the Pietermaritzburg High Court on an urgent application, seeking an order that the PA should withdraw the freezing of the depositors’ accounts.
January 17 - The court postponed Ithala’s urgent application matter to January 28.
January 20, 2025 - COSATU in KwaZulu Natal in a statement expressed sympathy with the bank and also called on the Prudential Authority to exhaust all possible options to resolve the crisis facing the bank instead of taking the liquidation route.
bongani.hans@inl.co.za