Strong financial institutions can help build strong economies

It is no secret that we live in extraordinary times in South Africa. No day goes by without further revelations about the plight of poverty and poorly-managed institutions that have blighted our country. The daily suffering of many South Africans has manifested itself in xenophobic attacks and civil unrest in the recent past. Who knows what’s next if the current challenges that are perpetuated by a non-inclusive economy and limited access to financial services by the majority of the citizens are not addressed once and for all?

As the CEO of Ithala SOC Limited, I have always maintained that strong institutions can help to build strong inclusive economies. And it is driven by this belief that I have dedicated a significant amount of my life to working with other reputable South African companies and organizations. It is against this backdrop that, having spent time in these institutions – and a significant portion here – that I realize the need of encouraging and promoting a bank wholly owned by the state.

I believe passionately in the role that financial services professionals and service providers play in making our economy efficient and productive, and I’m determined to do what it takes to ensure that Ithala SOC Limited continues to deliver what the public rightly expects. I want Ithala SOC Limited to be looked up to by all as a place with the strongest governance, ethics, and values, which can be seen in everything we do.

To provide context, we are a pioneer in banking the unbanked in KwaZulu-Natal and are striving towards becoming a fully-fledged bank and also being recognized as a state bank. It is also important to highlight that Ithala SOC Limited has been playing the role of a state bank for over 21 years and has done a pretty good job at that! But, what that this means in simple terms to the ordinary South African?

We have been providing access to financial services and insurance to ordinary South Africans who were excluded and continue to have limited access to these services from traditional players in the market. Currently, Ithala SOC Limited has provided finance of approximately R2.1billion to ordinary South African to buy a home, car, taxi, education, and other essential needs. Some of the homes we finance are in tribal land, where no other financial services organization does. Helping people to save and build wealth. Our brand promise is to help Ordinary South Africans to create wealth. We do this through our financial education program Ithala MoneyTalks. Currently, we have over R2.4 billion in customer deposits. This is a clear indication that our efforts of educating people about saving and creating wealth are paying off. Overall we are seeing positive behavior when it comes to managing money. We have a branch footprint of 38 branches in KZN, and in some of the areas, we are the only financial services institution. This does not only help these communities access financial services, but it also helps with creating employment and stimulating the local rural economy. Over the years, we have partnered with the government on several key projects to deliver services to ordinary South Africans. Amongst these, includes a partnership with the Department of Health sending students to Cuba to study medicine, playing a critical role in providing banking facilities to social grant recipients in the remote areas of KwaZulu-Natal responding to the COVID-19 pandemic by launching an online education platform IthalaEduPlatform to assist grade 12 learners during lockdown to prepare for their exams www.myithala.education 

The above highlight the role that Ithala SOC Limited plays in building an inclusive economy and providing access to financial services to previously disadvantaged communities. Our current banking license Exemption Notice, which is an interim mechanism that allows Ithala SOC Limited to conduct the activities of a bank without a permanent banking license, limits our ability to scale up our activities and offer more services. For Ithala SOC Limited to reach its full potential, it must get a permanent banking license. Engagements with the Prudential Authority are ongoing to transition Ithala SOC Limited from operating under the Exemption Notice to a permanent banking license.

To enhance our leadership muscle, we recently appointed Sethu Nsele as Chief Internal Auditor, Kabelo Nkambule as Compliance Officer; Sibongiseni Phakathi as Chief Information Officer; Cebile Mzimela as Company secretary, and Brenda Van Der Lingen as Chief Risk Officer. Our executive team has a combined banking experience of over 150 years!

We are enthusiastic to have these highly-experienced executives on board because their deep knowledge of the financial services space will drive our growth and expansion strategies.

Looking ahead, the role of civil society cannot be over-emphasized. Ensuring that there is a prudent, viable, fit-for-purpose, trustworthy financial services profession is too important to be left to governments alone. Civil society and the media played an integral role in shaping the economic growth conversation in the recent past. The challenge now is to ensure we use that momentum to transform our institutions and raise the bar on ethical conduct and commercial performance. 

Our journey continues. Our mission is to build a state bank that earns the trust of South Africans and build an immovable reputation in the financial services space. We strive for a financially sustainable Ithala SOC Limited to be as well-known for acting in the public interest and its uncompromising ethical standards as it is for the high quality of its financial services.

While currently focused on KZN, we are working towards being a nationally-connected business, with competent specialist resources - a business with a revitalized and focused leadership, independent oversight, and specialist skills and overall, a business that is aiming to become the benchmark for financial services in South Africa.

That we are in the right business has always been a conviction of mine: a business that provides solutions that are essential to support SA’s developmental goals. A business that provides banking, insurance products, and services focusing on corporate and retail customers. Our prospects are bright. We have a resilient and balanced portfolio of clients, highly-skilled employees, strong capabilities, and a support structure from civil society and other key stakeholders.

Where, then, does this leave Ithala SOC Limited?

I believe strongly that the country is best served by having a healthy and vibrant industry that supports a flourishing business community - and Ithala SOC Limited is an important part of that.

We have traveled a long journey and taken many steps to build a financial institution that can serve South Africa by inspiring confidence in our business dealings and empowering change in our society.

While it is still a journey, I am confident we have done enough to position ourselves as a reputable, strong financial institution that can help build a strong SA economy.

By Dr Thulani Vilakazi, CEO: Ithala SOC Limited