Wednesday, 20 November 2024

The Economic Freedom Fighters (EFF) welcomes the ruling by the Pietermaritzburg High Court, which has rightfully ordered the repayment administrator Johannes Kruger to return control of Ithala’s non-banking assets and operations. This judgment is a decisive victory for Ithala and a clear rejection of the reckless overreach that sought to cripple this vital institution.

Judge Muzi Ncube’s ruling affirms that Kruger’s mandate, as appointed by the Prudential Authority of the South African Reserve Bank, was limited to overseeing the repayment of deposits received after Ithala’s exemption from the Banks Act expired. It did not extend to Ithala’s broader operations or assets. This decision restores the full operational control of Ithala to its board, enabling it to resume normal business operations, including payments to suppliers and creditors, and reaffirming its critical role in supporting the rural economy and small businesses in KwaZulu-Natal.

For over 30 years, Ithala has been a lifeline for development finance, providing banking, insurance, and other essential services to the rural communities of KwaZulu-Natal and small businesses across the province. Its work extends to areas where commercial banks refuse to operate, including stokvels, school feeding cooperatives, and enterprises in underserved towns. The attack on Ithala’s operations threatened not only its survival but also the livelihoods of thousands who depend on its services. Its demise would have been a devastating blow to KwaZulu-Natal’s developmental agenda and its rural economy.

Judge Ncube’s ruling also exposes the misguided attempts to treat Ithala as though it were a pyramid scheme, disregarding its critical developmental mandate. This institution has never been a scheme of exploitation, but rather a cornerstone of rural and small business development. The court has drawn a clear line between Ithala’s non-banking

activities, which remain legitimate and unaffected, and its prior deposit-taking activities, which were the sole focus of Kruger’s appointment.

We commend the court for dismissing Kruger’s attempts to seize operational control, granting Ithala’s counterapplication, and ordering Kruger to pay the costs of the case. This ruling reinforces the principle that institutions dedicated to developmental finance must not be undermined by reckless administrators or overreaching mandates.

However, the court did chastise the bank for continuing to take deposits and insurance payments after their exemption from the Banks Act expired. In this regard, the EFF reiterates its call on the Prudential Authority and the Ministry of Finance to act decisively in safeguarding Ithala’s future as a banking entity, particularly seeing as there have only been technical compliance issues and no corrupt or untoward activities involving the bank.

This leads us as the EFF to condemn this harsh approach by the South African Reserve Bank (SARB) when dealing with black owned institutions who are easily accused of predatory banking practices, as opposed to white capital, which is approached softly even when these are the institutions daily subjecting the public to unfair banking practices.

Therefore, the intervention announced by President Cyril Ramaphosa to explore a comprehensive package for Ithala must ensure that Ithala’s developmental mandate is protected and that its operations are expanded to serve even more underserved communities. In this light, Ithala must be given a full banking license with the full support of the provincial government.

The EFF remains committed to defending institutions like Ithala, which prioritise the needs of the poor and marginalised over profit as they strive to achieve economic freedom for those who need it the most. The EFF will continue to monitor developments to ensure that Ithala’s role in rural economic development is not jeopardised.

ISSUED BY THE ECONOMIC FREEDOM FIGHTERS

Leigh-Ann Mathys (National Spokesperson) 082 304 7572

Thato Lebyane (Media Enquiries) 078 304 7572