SARB & Prudential Authority 2020/21 Annual Reports

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Finance Standing Committee

18 August 2021
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

Annual Reports 2019 - 2020

The Committee met virtually to receive a briefing on the annual reports of the South African Reserve Bank (SARB) and the Prudential Authority for the 2020/21 financial year.

SARB opened the briefing with a presentation on South Africa’s macroeconomic outlook. Following the shock of the COVID-19 pandemic, it expected output to recover to its 2019 level only in early 2023. The recovery had been uneven, with strong recoveries in agriculture and in the commodities sector – which in turn buoyed the current account and the rand – but a slower recovery in labour-intensive industries, and thus in employment levels. Output growth was also expected to contract temporarily during the third quarter of 2021 – possibly by around 0.4 percentage points – due largely to the recent unrest and looting in KwaZulu-Natal and Gauteng. Apart from supply chain disruptions, a major concern was that the unrest would have lasting effects on investment. Gross fixed capital formation had been declining as a percentage of GDP since mid-2019, and had not been revived by the economic recovery. Another concern was loadshedding and increasing energy prices. The latter was also, alongside global food inflation, contributing to inflationary pressures. However, inflation was expected to remain within its target range, and SARB’s monetary policy would remain accommodative, with a negative real repo rate and historically low borrowing costs.

In its annual report, SARB reported good performance against its strategic objectives, as well as progress in strategic initiatives such as crypto-asset policy. The profits of the SARB Group had increased from R2.851 billion in 2019/20 to R3.595 billion in 2020/21, owing largely to the increased profitability of the Corporation for Public Deposits. However, the profits of SARB itself had decreased by 74%, from R6.385 billion to R1.68 billion. The decrease was largely attributable to decreased fair value gains, due to the appreciation of the rand against the dollar.

The Prudential Authority also reported good performance against its priorities. It outlined its response to the COVID-19 pandemic, including lowered liquidity requirements, relaxed regulatory requirements, and the provision of capital relief on restructured loans. It had approved licenses for two banks, one representative office, 19 cooperative financial institutions, and 37 insurers. Three insurers – Clientele, Hollard, and Outsurance – had received administrative sanctions and, in Clientele’s case, a financial penalty. The Authority had detected three illegal deposit-taking schemes and had investigated a total of eight such schemes, with six investigations still ongoing.

The Chairperson asked SARB about the challenges at the Land Bank, about the economic impact of rising electricity tariffs, and about the high rate of branch closures among commercial banks. Only one other Member, representing the EFF, participated in the Committee’s discussion. He asked about the transformation of the financial services sector and about financial flows to tax havens. He also sought an update on SARB’s exit from Africa Bank, including the government’s efforts to purchase SARB’s shares. Because SARB had no operational control or board representation at Africa Bank, he proposed a separate meeting with Africa Bank to discuss its activities and the departure of its Chief Executive Officer. The Member also challenged the licensing of Discovery Bank, arguing that FirstRand companies and Discovery were owned and controlled by the same group of individuals, who already had significant economic influence. When SARB insisted that the Discovery matter had been handled by the competition authorities, he proposed an independent parliamentary inquiry into links between Discovery and other financial institutions.

Meeting report

Apologies were noted.

The Chairperson said that he would be participating in the meeting while driving to the airport. There were no flights from Polokwane to Johannesburg, so he had to catch a flight from OR Tambo International in Gauteng. It was an inconvenience imposed upon the people of Limpopo.
Mr Lesetja Kganyago, Governor, South African Reserve Bank (SARB), thanked the Committee for the invitation. SARB always enjoyed interacting with Parliament and hoped that such interactions could happen more frequently in the future. He would present the briefing on behalf of SARB and the Prudential Authority (PA).

SARB briefing: Macroeconomic overview and outlook

Recovery from COVID-19 shock

Mr Kganyago discussed SARB’s quarterly and annual GDP growth forecasts for South Africa (see slides). Output was projected to recover to its 2019 level only in early 2023.

South Africa’s recovery from the COVID-19 shock had been weaker than that of its peers. Among the weaknesses identified by Mr Kganyago were:
- Lower investment than in peer countries, with gross fixed capital formation having declined continuously as a percentage of GDP since mid-2019;
- Persistent loadshedding, with cumulative loadshedding in 2020 having exceeded that in 2019 and 2018, despite lower levels of economic activity; and
- Slow recovery in labour-intensive sectors, such as construction and transport, which were more severely restricted by lockdown restrictions.

Agriculture had been a “star performer.” However, the recovery had centrally been buoyed by commodities, given increases in global commodity prices, with particular contributions from palladium and rhodium. Exports had recovered strongly, and the robust terms-of-trade were supporting a significant current account surplus. In 2022, however, the surplus was expected to decrease, and perhaps even to be replaced by a moderate deficit. The terms-of-trade had also supported a significant appreciation of the rand.

Impact of recent unrest

Mr Kganyago said that the recent unrest and looting had constituted a negative shock, most severely affecting the Gauteng, KwaZulu-Natal, and Mpumalanga provinces, which collectively accounted for 58% of GDP. The looting had affected:
-3 931 stores;

-100 malls and 112 shopping centres;
-200 liquor outlets and distribution centres;
-1 223 ATMs and 269 bank branches;
-45 warehouses and 22 factories;
-113 communication infrastructure points; and
-More than 40 trucks.

The unrest had disrupted supply chains and had measurably shaken business confidence (see slides). Largely due to the impact of the unrest, GDP growth was expected to contract temporarily in the third quarter. However, Mr Kganyago said it was too soon to be precise about the magnitude of the effect. SARB projected that the unrest would reduce GDP growth by 0.4 percentage points, though this projection was more optimistic than that of other banks (see slides).

Inflation and monetary policy

Mr Kganyago said that inflation was rising globally. Central bankers in advanced economies held that it would be transitory, and would return to normal levels over the next two years. Yet unlike the advanced economies, many emerging markets – including Argentina, Mexico, and China – had begun to tighten their policy rates.

Inflationary pressures in South Africa were being driven by non-core inflation, especially
increased fuel prices and global food inflation. However, food inflation was expected to decline, especially with the help of the recovery in domestic agriculture.

In the absence of any unforeseen shocks, SARB expected South African inflation to remain within its target range. For this reason, and despite policy normalisation elsewhere, its monetary policy remained accommodative. The real repo rate was currently negative. Borrowing costs were at 56-year lows, and credit extension was increasing as a result.

Risks to recovery

Mr Kganyago identified the following as risks to South Africa’s economic recovery:
-Electricity supply;
-Future COVID-19 waves;
-Lasting impacts of riots on investment;
-Possibility of inflation quickening on global reflation; and
-Possibility of sharp correction in commodity prices, which would deteriorate public finances.

SARB Annual Report 2020/21

Strategic performance

SARB was satisfied with its performance across its five strategic focus areas (see slides). Notably, inflation had remained firmly within the target range, and was projected to remain within the target range over the two-year forecast horizon. In managing currency, SARB had delivered banknotes and coin orders in full, despite the effects of COVID-19-related disruptions on production costs, and counterfeiting had been below the target threshold.

Mr Kganyago listed the tools that the SARB had used to respond to the COVID-19 outbreak, including lowering interest rates by 300 basis points. He also discussed other strategic initiatives undertaken by SARB – including the relaunch of the SARB Currency App, a position paper on crypto-asset recommendations, and a central bank digital currency feasibility study – and SARB’s social investment initiatives (see slides).

Finance and procurement

Mr Kganyago gave a breakdown of SARB’s profits in the 2020/21 financial year (see slides). The SARB Group’s net after-tax profit had increased substantially, from R2.851 billion in 2019/20 to R3.595 billion in 2020/21. The increase was mainly driven by a profit in the Corporation for Public Deposits, which in the previous year had made a loss of R2.77 billion.

SARB’s net after-tax profit was R1.68 billion – a 74% decrease from the previous year’s profit of R6.385 billion. This decrease was mainly driven by decreased fair value gains, due to the appreciation of the rand against the dollar.

SARB’s Broad-Based Black Economic Empowerment (B-BBEE) performance had decreased from 22.1 points in 2019/20 to 21.3 points in 2020/21. The decrease was primarily attributable to a decrease in the black ownership score, due to lower spend on large-value projects and the impact of the COVID-19 pandemic. 

Human resources

Mr Kganyago said that SARB continued to be viewed as a preferred employer. It had spent R27.6 million on training and development that year, with 1 516 employees (67%) attending training. He also provided a breakdown of the racial and gender demographics of SARB management (see slides).

Prudential Authority (PA) Annual Report 2020/21

Overview of regulated sectors and new licenses

Mr Kganyago discussed the PA’s strategic priorities and the composition of the sectors it regulated (see slides). He highlighted growth in the cooperative banking sector, attributable to the registration of a fifth cooperative bank in 2020. Between February 2020 and February 2021, deposits in the cooperative sector had increased from R349 million to R419 million, and assets had increased from R423 million to R502 million.

Between 1 April 2020 and 31 March 2021, the following license applications had been considered by SARB:
-Five banks (two approved, one declined, and two in progress);
-Two representative offices (one approved and one in progress);
-23 cooperative financial institutions (19 approved, two declined, and two in progress); and
-37 insurers (19 approved and 18 in progress).

Annual performance

Mr Kganyago outlined the PA’s regulatory strategy, and the measures implemented by the PA in response to the COVID-19 pandemic (see slides). The PA’s approach had been to facilitate the orderly use of buffers to support the economy during the downturn, including through lowered liquidity requirements, relaxed regulatory requirements, and the provision of capital relief on restructured loans.

Investigations and administrative sanctions

Between 1 April 2020 and 31 March 2021, SARB had investigated eight illegal deposit-taking schemes, three of which were new schemes detected during that period. Two investigations had been completed, and six remained ongoing.

During the period under review, PA had imposed administrative sanctions on three insurers. Clientele Life Assurance had been fined R200 000 for non-compliance with the Financial Intelligence Centre Act; and Hollard Life Assurance Company and Outsurance Life Insurance had been cautioned not to repeat the conduct that had led to their non-compliance.

Transformation of the financial services sector

Mr F Shivambu (EFF) asked about progress in transforming the financial services sector, insofar as SARB played an important role in that sector. In the period under review, had there been any changes in the ownership or control of the banks and insurance companies licensed by SARB? Or was the sector in a “regressive environment,” where even the minor advances in transformation that had been achieved were “shrinking into insignificance”?

Mr Kganyago replied that the transformation of the financial sector was governed by the Financial Sector Charter, gazetted under the B-BBEE legislation. Under that charter, an annual report was published on the transformation of the sector. He had not seen the most recent report, but perhaps another SARB official had. Ownership was not the only concern – the Financial Sector Charter set out a battery of indicators to be tracked.

Mr Kuben Naidoo, SARB Deputy Governor and Chief Executive Officer (CEO) of the PA, said that there had been no significant changes in shareholding. Mainly due to the COVID-19 pandemic, there had not been any major transformation or ownership transactions over the last year. However, there had been significant progress on other metrics, as outlined in the report of the Financial Sector Charter.

The Chairperson asked whether any officials from the National Treasury were present to speak to Mr Shivambu’s question. It was a policy matter that had to be supervised at the department level.

The Committee Secretary replied that there were Treasury officials on the platform, but she was not sure whether transformation was their area of expertise.

The Chairperson said that he thought the transformation of the financial sector was in the purview of Treasury and of the National Economic Development and Labour Council (Nedlac). He was not sure whether the Department of Trade, Industry and Competition was also involved. At some point the Committee had met in Parliament’s old Assembly chamber to consider the issue. Could Treasury respond?

There was no response.

The Chairperson asked whether Treasury officials were not present to represent the department, and why they were so quiet if they were indeed on the platform.

The Committee Secretary said that the Treasury official had left the platform.

The Chairperson asked the Committee secretary to call the official and ask her why she had left. Treasury was supposed to attend the Committee’s meetings with different entities. As much as SARB was an independent entity, surely the Minister of Finance took responsibility, at the political level, in oversight processes.

Mr Shivambu disputed the notion that the transformation of the financial sector was solely the responsibility of Treasury and Nedlac. SARB had a role to play in transformation, and the Committee should not “exonerate” it from accounting on that basis. It was a regulator, it issued licenses, and, in some instances, it set the principles. During the Committee’s prior engagements about transformation in the financial sector, it had emerged that SARB should indeed play a role – and SARB should occasionally report to the Committee about what it had done in this regard. In fact, any senior official from Treasury would only tell the Committee that Treasury had made a policy prescription and that implementation was the responsibility of SARB and other licensing institutions.

Mr Shivambu said that if no detailed report on transformation was forthcoming, the Committee should request such a report. What was the progress in transforming the financial services sector? What was the progress on each of the metrics identified, and what part had been played by each of the stakeholders?

The Chairperson said that the Committee secretariat would follow up with Treasury and Nedlac. The Committee had met previously, perhaps in 2019, to discuss the transformation of the financial sector. He asked the secretariat to find a record of the decisions that the Committee had taken at that meeting, so that it could follow up appropriately.

Mr Shivambu asked whether SARB had approved any new banking or insurance licenses during the period under review.

Mr Kyangyago referred Mr Shivambu to slide 53 of the presentation. SARB had approved two license applications for banks, one for a representative office, 19 for cooperative financial institutions, and 19 for insurers. Other applications were still in progress.

Mr Naidoo added that many of the new licenses were in the cooperative sector. The PA continued to use the cooperative sector as a base for promoting entry into the financial sector and for promoting diversification of the financial sector.

Discovery Bank

Mr Shivambu asked about the licensing of Discovery Bank in light of the conglomeration of Discovery with FirstRand companies like First National Bank (FNB). In reality, Discovery Bank was owned and controlled by the same people who owned and controlled FNB. He knew that, SARB had issued a query when Discovery Bank had initially applied for the license. What had ended up happening? Why had SARB licensed two banks which belonged to the same conglomerate – a conglomerate which, moreover, already controlled many economic sectors, including strategically important sectors? 

Mr Kganyago replied that he was reluctant to discuss individual institutions regulated by SARB. However, when Discovery Bank had been licensed, FirstRand had had to exit its shareholding in Discovery. They were now two different entities.

Mr Naidoo said that the licensing of Discovery Bank had gone through the competition authorities, who had imposed certain specific conditions, including on ownership. For example, Discovery Bank had initially offered Discovery-branded cards, and FirstRand had had to exit that venture, under specific conditions imposed by the Competition Commission.

Mr Shivambu said that he thought the links between Discovery and FirstRand companies went “much deeper” than could be addressed by the exit of First Rand from its stake in Discovery. Discovery and FirstRand were owned and controlled by the same people. This was a conglomerate of a different kind. As he had said, those people had significant influence elsewhere in the financial sector – including in insurance, through Momentum – and in other economic sectors.

Mr Shivambu suggested that the Committee should investigate the matter fully in a separate meeting. It needed a breakdown: who controlled each of these institutions, Discovery and FirstRand? Who had the biggest influence over and the final say in each? This would be a parliamentary inquiry into links between Discovery and other financial institutions, separate from the Competition Commission’s processes, and it would proceed on the understanding that Parliament was concerned about the transformation of the financial sector.

Mr Naidoo said that he thought he was covered by his earlier comments. It was a matter for the competition authorities, who had given specific instructions and whose instructions were being complied with.
Africa Bank

Mr Shivambu asked for an update on SARB’s exit from African Bank. He also wanted to know whether it was true that SARB had appointed Rothschild & Co to act as transactional advisers during the exit. What had informed that decision? Had there been a competitive bidding process? Rothschild & Co’s history in the banking and financial services sector was common knowledge. Were there not other suitable transactional advisers, who were black and who could have handled it differently? 

Mr Kyangyago replied that SARB had appointed transactional advisers through a competitive process. The advisers were Rothschild & Co, BofA Securities (formerly known as Bank of America Merrill Lynch), and Moshe Capital – it was a consortium of three advisers. The advisers had gone out to market and asked for expressions of interest. Several consortia were interested, though so far no bidder had expressed interest in acquiring all of SARB’s shares. Of course, the challenge was that bidders had to “show us the money” – they had to demonstrate that they could actually afford the acquisition. It was likely that the process would lead to a big initial public offering, extended to a range of shareholders rather than to one particular shareholder. The transactional advisers were evaluating SARB’s options.

Mr Shivambu asked whether the South African government was one of the bidders seeking to acquire SARB’s shares in African Bank. He was asking because there had been many commitments to the creation of a state-owned bank, and the consensus seemed to have been that the African Bank would become that state-owned bank. The former Minister of Finance, Mr Tito Mboweni, had said that the Deputy Minister had been assigned to the matter and that engagements with SARB to acquire the shares had been at an advanced stage. Mr Shivambu therefore wanted to check whether there had been progress on those commitments.

Mr Kyangyago replied that SARB had received expressions of interest, including a letter from Mr Mboweni expressing such an interest on the government’s behalf. Importantly, the African Bank resolution plan had included tag-along and come-along clauses. This meant that a bidder could not buy half of SARB’s shares in African Bank without also buying half of the other banks’ shares in African Bank. A bidder had to buy all those banks’ shares in order to buy all of SARB’s shares. So the transaction was not just about SARB’s exit, but also about the exit of the other banks. When African Bank had been restructured, SARB had had to appeal to other South African banks to buy shares to save the institution, urging them that “we’re in this together.” So any exit would also have to be proportionate, in line with the contributions made by those other banks.

Mr Shivambu had another question about African Bank, which SARB might be able to answer as a major shareholder. What were the circumstances that had led to the resignation of African Bank’s CEO?

Mr Kyangyago replied that SARB was a major shareholder in African Bank, but did not have operational responsibility. Even though SARB held half the shares, it was not even represented on the board. That was deliberate. The reason was simple: SARB did not want control over any bank, because it supervised the sector. That was why African Bank appeared in SARB’s financial statements not as a subsidiary but as an associate. 

Mr Kyangyago said that the CEO’s resignation was a matter between the CEO and the board. African Bank had informed SARB that the CEO was leaving, and SARB had engaged with the CEO before her departure. But it was a board matter, not a shareholder matter.

Mr Shivambu said that the Committee needed accountability on the events and dynamics at African Bank, and should therefore follow up. SARB had said that it was not represented on the board and did not have control over the institution, because it was a regulator as well as an owner. If SARB could not provide accountability, who should? Perhaps the Committee should summon the African Bank board to account.

Mr Naidoo agreed that Parliament should hold the board accountable. SARB was not responsible for control of African Bank as a supervisor or as an owner. The reasons for the CEO’s departure were between the CEO and the board. If Parliament deemed fit, it should ask the board to disclose those reasons.

Financial flows to tax havens

Mr Shivambu asked about progress in containing illicit financial flows. How much money that went through SARB was destined for territories known to be tax havens? For example, how much money did SARB allow to go to Luxembourg, Monaco, Switzerland, and Bermuda? Alternatively, SARB could provide a breakdown of the territories to which South African money was sent. That would provide an indication of the direction of South African financial flows.

Mr Naidoo replied that the financial surveillance department tracked financial flows. Over the last two years, SARB had significantly improved its capacity to track illicit financial flows and thus to attempt to prevent such flows. Five years ago, SARB had probably issued about 20 blocking orders each year – now, it was probably issuing about 200 each year. All forfeiture blocking orders were noted in government gazettes, and the gazettes included information about where the flows were coming from, why SARB was blocking them, and so on.

Mr Naidoo said that he did not have on hand a detailed breakdown of flows according to jurisdiction. However, by definition, if SARB cleared a financial flow, it was not illicit or illegal. Not all transactions in the jurisdictions mentioned by Mr Shivambu were illegitimate.

Mr Shivambu said that he would restate the question in SARB’s language. He wanted a breakdown of the financial exchanges, whether legitimate or illegitimate, between South Africa and overseas tax havens. How much money was “legitimately, in inverted commas,” transferred to Luxembourg, Switzerland, Monaco, Bermuda, the Virgin Islands, the Cayman Islands, and other territories that were defined or characterised as tax havens? If SARB could not provide the information now, it could respond in writing, in order to facilitate proper parliamentary oversight.

Mr Naidoo replied that he would attempt to respond in writing with the size of the flows to the relevant jurisdictions, if Mr Shivambu would provide a list of the jurisdictions that he was interested in. Importantly, however, South Africa was now a signatory to the OECD tax code, which allowed for a free flow of information between South African tax authorities and most of the tax jurisdictions mentioned by Mr Shivambu.

Economic impact of rising electricity tariffs

The Chairperson said that he had heard Mr Kyangyago talking about erratic energy supply, and especially about loadshedding, but he had not heard him mention the rising electricity tariffs. He thought that increasing electricity costs were dampening investment, and they also absorbed a lot of household income – money that people would otherwise spend elsewhere.

Mr Kyangyago confirmed that he had mentioned energy prices generally, but not rising electricity tariffs specifically. Indeed, rising electricity tariffs were a threat to the inflation outlook – this problem was “well spotted” by the Chairperson. Worryingly, electricity tariffs had consistently been rising faster than inflation. However, SARB’s inflation forecast in the current period did include electricity tariffs, as announced by Eskom. It was a risk going forward – SARB could not predict what prices Eskom would need to charge in the future. 

Mr Kyangyago said that, importantly, inflationary risks in South Africa were essentially driven by administered prices – electricity tariffs, water tariffs, and local government rates and taxes. Perhaps most worrying, local government rates and taxes were now also increasing faster than inflation. If government continued to increase the cost of its services faster than inflation, there would be a problem – especially while remuneration was contained and growing at the pace of inflation. Ratepayers might not be able to meet their obligations.

The Chairperson said that he wanted SARB or the Parliamentary Budget Office to provide a report – perhaps a slide or so – on the economic impact of rising electricity tariffs, especially on household incomes and on investment. It was a serious matter. Wherever he went as a public representative, people were raising this issue. Even students who stayed in rented accommodation were bringing it up – electricity costs ate up a lot of the money that they received from NSFAS and from their parents. He asked SARB whether its economists could prepare a report on the issue.

Mr Kyangyago agreed to provide such a report in writing.

The Chairperson said that it would be very helpful. Members were public representatives and they had to explain some things to the public in scientific, and not merely general, terms.

Closures of physical bank branches

The Chairperson said that he had seen that deposit-taking banks were closing branches. One of the biggest banks – he thought ABSA – had closed one of its biggest branches in Polokwane. Standard Bank had also been closing branches recently. Why were banks doing this, instead of increasing their accessibility? For example, that week Standard Bank had received a tender with the Limpopo provincial government – he had seen Standard Bank executives signing contract documents with a Member of the Executive Council. Yet Standard Bank was not accessible to the people. Could SARB explain? Though these were private banks, SARB regulated them.

Mr Kyangyago replied that it was difficult to say, because it was a business matter. Yet he could conduct a straw poll now: how many Members had been to a branch of their banks in the past week, month, or even year? He himself had not been inside the branch of a bank in more than three years. That was because banking services had moved to a digital delivery model. Many people now interacted with their banks using their mobile devices, rather than through physical branch infrastructure, so it was difficult for banks to justify keeping their physical branches open. If anything, this was a global trend. One exception was Capitec, which he thought continued to open new branches.

Mr Naidoo added that SARB received annual reports from each bank on branch closures. It asked the banks to justify any closures, and they primarily gave the same explanation outlined by Mr Kyangyago. The banks provided SARB with fairly detailed data on the uptake of cellular phone channels and other digital channels. However, most branch closures were in dense urban areas, in the bigger cities. For example, in the Rosebank area of Johannesburg, a given bank might have four branches, and might close one or two of those.

The Chairperson asked Mr Naidoo to share a report about banks’ reasons for branch closures, so that Members, as public representatives, would have an understanding. Members understood that it was the 21st century and that people now lived on “the information superhighway,” but some ordinary people were accustomed to physical banking and did not yet use digital platforms.

Mr Naidoo agreed to share a written report. 

Other matters

Mr Shivambu noted the briefing’s reference to SARB’s profits (see slide 39). What portion of those profits had been deposited into the National Revenue Fund, as required by law?

Mr Mogam Pillay, Chief Operating Officer, SARB, replied that SARB had transferred R76 million to government during the period under review. Its transfers to government were determined by section 74 of the SARB Act, which said that government should receive 90% of SARB’s profits, after providing for any contingencies and reserves. The R76 million transfer had been in line with that provision. Full details were available on page 94 of the annual report. 

Mr Shivambu said that the Committee should consider its programme with regard to the SARB Amendment Bill, which sought to discontinue the holding of private shares in SARB. When would the Committee complete those processes? It had held public hearings and should finalise the legislation. 

The Chairperson congratulated SARB on being a preferred employer, as Mr Kyangyago had mentioned during the briefing.

The Chairperson asked whether SARB was involved in trying to put the Land Bank on better footing. It was always facing serious challenges. The Committee oversaw the Land Bank, and it was a state-owned enterprise, but was SARB involved at all?

Mr Kyangyago replied that SARB did not regulate the Land Bank – it was governed by its own act and was overseen by Treasury. SARB had gotten “caught on the wrong side” of the Land Bank, however, because it had invested in Land Bank bills. SARB had essentially been “short-changed” when the Land Bank had said that it could not pay SARB. SARB had had to “stand in the queue,” like all the Land Bank’s creditors. Such a situation was problematic. It meant that Land Bank paper no longer qualified as a high-quality liquid asset, which in turn meant that its paper would be treated like anyone else’s paper. The sooner the problems at the Land Bank were solved, the better.


The Chairperson said that the Committee would follow up on issues raised during the meeting, including some of those raised by Mr Shivambu. He asked the Committee secretariat whether there were any announcements for Members’ information.

The Committee secretary said that the Committee would meet again on Tuesday 24 August.

The Chairperson thanked Members for their attendance and participation. He understood that it had not been a convenient day to meet, because Members were all preparing to travel from different locations across the country to Parliament in Cape Town. With the aviation industry facing serious challenges, there were very few flights to Cape Town. He thanked the team from SARB and the PA, and all other attendees.

The meeting was adjourned. 

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