The case for a state-owned bank

South Africa's banking system is one of the most concentrated and exclusionary in the world.

- Andile Lungisa

A handful of powerful commercial banks dominate the sector, posting obscene profits while millions of people are locked out of meaningful access to finance.

In a country scarred by colonial dispossession, apartheid and racial capitalism, this is a system working as designed — to serve capital, not people. Commercial banks operate on one principle: profit maximisation. In an unequal society, the principle entrenches inequality. Those with wealth are rewarded with cheap credit, personalised services and financial flexibility. Those without wealth are punished charged to exist in the banking system.

The poor, overwhelmingly black and coloured, pay monthly fees just to hold an account. They are hammered by transaction costs, punitive penalties and extortionate interest rates on unsecured credit. This is systematic financial extraction from the working class and the poor.

Instead of financing productive investment, industrialisation and inclusive growth, commercial banks profit from debt and financial speculation. Low-income workers are targeted via high-interest loans that lock households into permanent indebtedness. Informal traders, township businesses, cooperatives and rural enterprises are denied affordable credit because they do not conform to narrow risk models built around established, formal and historically white-owned enterprises.