On February 4 the standing committee on finance and portfolio committee on trade & industry convened the CEOs of major banks, the National Treasury, the SA Reserve Bank and Financial Sector Conduct Authority under one roof.
The purpose of the meeting was to conduct oversight on the role of these powerful institutions in economic transformation and credit allocation. However, what was meant to be an inquiry into their impact on economic growth turned into a grim reminder of the extent of wealth concentration in the hands of the few, and the failure to transform SA’s economy to reflect the demographics of the country.
The co-chairs, Joe Maswanganyi, chair of the standing committee on finance, and Mzwandile Masina, chair of the portfolio committee on trade & industry, were correct in asserting that parliament must intensify oversight of banks. In the absence of proper parliamentary scrutiny and a state-owned bank that can act as a counterbalance, these institutions will continue to be an impediment to the radical economic shifts required to revive industrialisation and economic growth.
SA’s banking sector is among the most concentrated in the world, with just four major banks — Absa, Standard Bank, FirstRand and Nedbank — accounting for more than 80% of the market. According to the Prudential Authority’s 2023/24 report, the banking sector manages assets worth R6.9-trillion, or 118% of the country’s GDP. That extreme concentration has entrenched financial exclusion as these banks prioritise profit maximisation over broader economic development.
Despite these alarming levels of wealth concentration there is no clear policy intervention to address the dominance of these banks.
This structure limits competition, raises barriers for new entrants, and reduces the incentive for banks to innovate financial products that can support small and medium-sized enterprises (SMEs) and industrialisation initiatives.
The consequence of this banking oligopoly is that capital allocation remains skewed in favour of sectors that already hold economic power. Manufacturing, which is vital for re-industrialisation, receives little support, while consumer and real estate financing dominate.
Instead of funding production and infrastructure, banks prefer short-term, high-yield lending, reinforcing an economy that is consumption-driven rather than production orientated.
Despite these alarming levels of wealth concentration there is no clear policy intervention to address the dominance of these banks. Their influence extends beyond financial services — they control access to home loans, education loans, insurance, credit and even the ability to receive pay. Yet they operate with minimal accountability.
When questioned about their role in perpetuating economic inequality, poverty and unemployment, bank executives feigned ignorance, as if they had only just arrived in SA. This was particularly evident when MPs across party lines raised concerns about discriminatory lending practices.
With the exception of one major bank, most institutions denied any allegations of discrimination, arguing instead that affected clients lacked sufficient information about available financial services and dispute resolution mechanisms. To them, what parliament sees as systemic exclusion is merely an administrative issue that can be addressed through better consumer education.
Their influence extends beyond financial services — they control access to home loans, education loans, insurance, credit and even the ability to receive pay.
This disconnect between banks and the reality for many South Africans is a major concern. The financial sector is supposed to be an enabler of economic activity, yet in its current form it serves as a gatekeeper that entrenches existing inequalities. A black entrepreneur seeking funds for a manufacturing venture faces insurmountable hurdles, while large corporations with established financial histories continue to receive preferential treatment.
One of the key takeaways from the oversight meeting was that under the current banking framework SA will never channel sufficient credit to the productive sectors of the economy. The country is experiencing deindustrialisation at an alarming rate, yet banks continue to resist the fundamental shifts needed to finance infrastructure development, local manufacturing, and industrial expansion.
In his closing remarks Masina contextualised the scale of available financial resources, highlighting that the estimated R4-trillion required to fund the infrastructure backlog is sitting in state assets, state-owned companies and the private sector. These funds could be immediately mobilised for infrastructure projects and economic development, yet banks remain unwilling to play their part in supporting these initiatives. Instead, they maintain restrictive credit policies that exclude the majority while facilitating capital flight and speculative investments that do little to create jobs or reduce inequality.
For those of us who asked critical questions and attempted to provide a way forward, the conclusion is clear: banks in their current form will not contribute to SA’s re-industrialisation. Their lending priorities do not align with the country’s developmental needs, and without intervention they will continue to be a stumbling block to economic transformation.
What is to be done? Both committees must revisit the 2017 First Report on the Transformation of the Financial Sector adopted by the National Assembly. It contains important recommendations that must now be enforced to ensure financial resources are allocated in a manner that supports re-industrialisation.
The 2017 hearings exposed the extent of monopolisation in banking and called for stronger financial inclusion measures, increased support for black-owned businesses, and the establishment of a state-owned bank. To date those recommendations have not been meaningfully implemented. Parliament must now compel the financial sector to report on the progress of these recommendations, particularly in relation to:
- Credit allocation to productive sectors such as manufacturing, energy and infrastructure development.
- Financial inclusion targets, ensuring that emerging businesses and previously disadvantaged individuals can access capital on competitive terms.
- Transformation in ownership and management, to reduce racial and gender disparities in the financial sector.
- The establishment of a state-owned bank, which remains the most viable alternative to the private banking oligopoly.
Additionally, future engagements with banks, financial development institutions and the Public Investment Corporation must not be generic discussions. These institutions must be held accountable for implementing transformation measures and demonstrating clear progress in aligning their lending practices with national development priorities.
If parliament fails to take decisive action all the good intentions of the committees and the presence of senior banking executives at these oversight meetings will be in vain. Without structural reforms SA will remain trapped in a cycle of financial exclusion, deepening inequality, and economic stagnation.
The reality is stark: banks in their current form will not support re-industrialisation. Their profit-driven models are incompatible with the long-term developmental needs of the country. If left unchecked they will continue to prioritise speculative investments, consumer debt and wealth concentration at the expense of national development.
It is now up to parliament to intervene decisively, using legislative and policy instruments to break the grip of monopoly banking and ensure financial resources are mobilised for inclusive economic growth. Without this intervention SA will remain a country where wealth is concentrated in the hands of the few, and industrialisation remains an unattainable dream.
• Maotwe is treasurer-general of the EFF and an MP serving on the standing committee on finance.
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