Mboweni Says S. Africa Should Buy Bank to Boost Development

South Africa’s government should consider buying one of the country’s banks to boost access to finance for its citizens and businesses, said Tito Mboweni, the former central bank governor.

“Any one of the existing banks” should be considered, Mboweni, 55, said in an interview at a Johannesburg restaurant yesterday. “It’s a huge amount of money involved, but you must think big, beyond the squatter camp, and then amalgamate that with all these development finance institutions.”

President Jacob Zuma has promised radical economic transformation over the next five years to create jobs and spread wealth to the black majority who still lag behind whites two decades after the end of apartheid. The government can’t bring significant change without access to capital, Mboweni said. The biggest banking groups in South Africa include FirstRand Ltd. (FSR), Standard Bank Group Ltd. (SBK), Barclays Africa Group Ltd. (BGA) and Nedbank Group Ltd. (NED)

FirstRand is South Africa’s biggest banking group by market capitalization at 244 billion rand ($22 billion), while Nedbank, the fourth largest, has a market value of 124 billion rand, according to data compiled by Bloomberg data.

The lender must be “a deposit-taking institution,” said Mboweni, who is a member of the ruling African National Congress’s national executive committee. “It’s a huge intervention and the advantage with acquiring one of the existing banks is that you have the infrastructure.”

No Muscle

Postbank, a state company linked to the Post Office that mainly distributes welfare payments, doesn’t have the infrastructure or the “muscle,” he said. Mboweni said the country’s largest lenders aren’t doing enough to boost the investment needed to transform an economy molded by the apartheid system of whites only government until 1994.

He cited examples of small, black-owned businesses being denied loans for projects.

“I would imagine the South African authorities and government would have a lot of other priorities to deal with and areas to spend money on,” Maria Ramos, chief executive officer of Barclays Africa, said on a conference call today. “Buying one of the large banks wouldn’t be top of the priority list and it already owns a couple of banks; it owns Postbank and the Development Bank.”

While the Development Bank of Southern Africa and the Industrial Development Corp. are state owned, they don’t take deposits.

‘Not Impossible’

“A state development bank doesn’t mean 100 percent owned by the state, but it must be majority owned by the state because you want the determination of policy direction to be in line with your goals,” Mboweni said.

China has state-owned banks, it’s “not impossible,” he said. “You need scale. You need quantum.”

Mboweni declined a nomination earlier this year for a seat in Parliament to instead focus on “economic transformation” through his Mboweni Brothers Investment Holdings. A former labor minister in Nelson Mandela’s administration from 1994, Mboweni said he would consider returning to public office in the future. He is currently non-executive chairman of packaging company Nampak Ltd. (NPK) and pan-African oil and gas exploration firm Sacoil Holdings Ltd. He is also chairman of the Africa Centre for Economic Transformation and is an international adviser for Goldman Sachs Group Inc.

Mboweni said, if he were in government, he would seek to stop banks operating property companies as this could stifle lending to competing developers.

“I think there’s a gap in the South African legislation where banks which are supposed to be the intermediaries, those who save and those who borrow, actually compete in the same market as the people who come and borrow from them,” he said.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Gordon Bell, Karl Maier

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