There’s none so jaundiced as an unwashed columnist. I returned from a brief winter school holiday with my daughters to the indignity of filling toilets with buckets of pool water and washing our tired, travelled bodies in basins of stove-warmed said pool water.
My thoughts immediately wandered to the even less fortunate — those who don’t have the luxury of resorting to freezing backyard pools in the dead of winter as Johannesburg continues to suffer the fallout of decades of criminal neglect under successive ANC kleptocracies.
The water crisis is worthy of a column on its own, and it will get one next week. I’m meeting with department of water & sanitation director-general Sean Phillips to hopefully illuminate just how deep this particular ANC-dug hole goes, and whether we can climb out of it.
The department’s tagline, “Water is life, sanitation is dignity”, would be hilarious if it weren’t so cruel, especially for people like academic Anthony Turton who dared to speak truth to power and has been hounded out for his troubles, while corrupt cadres gorged themselves. But more of that next week.
I’ve noticed a palpable rise in public anger. From the Lotto to the deputy president’s long list of ethically challenged friends, to higher education minister Nobuhle Nkabane’s questionable board appointments at the sector education and training authorities, (not to mention what looks like yet another dirty tricks campaign inside the SA Police Service) the rot continues, and the government of national unity appears structurally incapable of meaningful change. Even those who once held out hope must now concede that the ANC cannot change its spots. Smuts Ngonyama was right all along.
And while the president is busying himself playing musical chairs with principle his now former trade, industry & competition deputy minister, Andrew Whitfield, has enrolled in Harvard Kennedy School’s “Leading Economic Growth” programme, led by the formidable professors Ricardo Hausmann and Matt Andrews. That’s actually all that matters right now. Only growth will save us.
But while Whitfield is grappling with the theoretical frameworks in the lecture halls of Harvard, back home we’re actively dousing the embers of growth through a quiet but consequential shift, hidden in the arcane world of banking regulation and international compliance. Basel IV, or Basel endgame, went live on July 1, which SA is preparing to implement with a kind of missionary zeal even as our major global competitors delay, water down or opt out entirely.
Now, for the average citizen mopping the floor with pool water, “Basel IV” probably sounds like a luxury ski destination. But it’s anything but. It’s the latest iteration in a long line of global banking regulations designed by the Bank for International Settlements in Switzerland, the global referee for banking safety. On paper, Basel IV aims to harmonise how banks calculate risk, especially by clamping down on their ability to use internal risk models that often yield friendlier capital requirements. In short, it tries to stop banks from being too clever with how much risk they say they’re taking.
By constraining banks’ use of internal risk models, they are being forced to hold more capital, even for loans deemed low-risk by their internally generated and expensive models. A so-called “output floor” ensures that no matter how sophisticated a bank’s internal models are, they cannot yield capital requirements lower than 72.5% of the standardised approach. For SA’s highly competent, risk-averse banks, which have weathered every global storm since 2008, this is an insult.
And it’s a hammer blow for small and medium enterprises (SME) lending. Why? Because SMEs don’t have credit ratings. They aren’t blue-chip. But they are where jobs come from. Basel IV, implemented without nuance or proportionality, punishes banks for lending to them. It forces a “one-size-fits-none” capital burden on local institutions that have already proven their reliability. The result? Banks will move capital away from SMEs and towards larger, lower-risk corporates, because that’s what the rules now reward.
At the recent Beyond Banking 2025 conference the disconnect was palpable. Banks are investing in AI, embracing digital services and pledging inclusion, but behind the scenes rising capital and compliance costs are forcing them to retreat from precisely the sectors that drive inclusive growth. If lending is going to happen where it’s needed most, it won’t be through the banks. It’ll be via private credit, fintechs and digital-native lenders who aren’t yoked to Basel’s blindfold.
Unless, of course, the government gets to them too. Which brings us to the department of home affairs and its thunderous 6,500% price hike for identity verification services through the National Population Register. Home affairs minister Leon Schreiber framed the move as an overdue end to “corporate profiteering”. He didn’t name names, but we all know who he meant: TymeBank. And Tyme’s usually mild-mannered CEO, Coen Jonker, came out swinging.
In an open letter that should be compulsory reading for anyone who cares about digital inclusion, Jonker laid out exactly what’s at stake. TymeBank, with more than 11-million mostly low-income customers, relies on real-time identity verification to offer zero-fee accounts. With the fee jumping from 15c to R10 per look-up, this model collapses. The poor lose their access to digital banking just so the government can “recover costs” from a broken system that by Schreiber’s own admission fails more than half the time.
Schreiber claims users can simply switch to a new “R1 batch queue,” but anyone in fintech knows that real-time is non-negotiable. We’re not printing chequebooks any more. In a digital world verification must be immediate, especially for fraud prevention, account activation and compliance. The new pricing penalises real-time innovators such as Tyme while giving slow-moving incumbents a 90% discount.
Jonker’s letter skewers the hypocrisy. Around the world governments subsidise identity systems because they’re a public good. In SA we’re now taxing that infrastructure to death, pushing digital banks to the brink and undermining our own anti-money-laundering compliance and greylisting recovery efforts in the process.
While I admire Schreiber’s efforts to turn around the ailing home affairs department he inherited from previous administrations, it’s a strategic blunder. You can’t extol digital transformation and then destroy its foundation. In the same way you can’t claim to champion SMEs while implementing a Basel IV that chokes off the very risk appetite they rely on.
You certainly can’t scream about “corporate profiteering” while trying to balance your departmental books on the backs of the poor.
• Avery, a financial journalist and broadcaster, produces BDTV's ‘Business Watch’. Contact him at michael@fmr.co.za.
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