The PA will revisit the Credit Act in order to make it easier for people to obtain housing loans or other forms of critical finance from financial institutions.

 

FICA legislation has in effect helped to entrench and increase the gap between the rich and the poor. Although this legislation has protected the economy from some of the harmful effects of reckless lending, it has inadvertently shored up the visible signs of apartheid. Funding mechanisms will have to be created that bridge this gap.

 

The PA will reinstitute finance policies that worked in the past, such as the thirty-three-and-a-third subsidy scheme, which allowed certain people to gain access to finance, especially those in the market segment where banks were reluctant to provide housing finance. In this instance, government contributed a third of the loan repayment for a period of up to five years. This scheme had the result that even those citizens who became unemployed during the five-year period did not lose their homes to the banks as a result of nonpayment.

 

The PA intends to create a state-funded bank that gives loans for various causes to people who would otherwise have to pay very high interest rates for credit. Such loans could be for homes, for businesses and other causes, including education. Interest charged could merely be in line with inflation.

 

The PA views the current system of banking as somewhat obscene in that the SA Reserve Bank provides capital at a low interest rate to privately owned banks who then charge much higher interest on loans to South African citizens, particularly taxpayers. A well-managed state bank would be able to pass on interest rate savings to the South African consumer. The PA does not intend to nationalise any privately owned banks, but the state’s bank would be a competitor to private banks and it is the PA’s contention that the state bank would be able to prove itself as a strong and stable competitor, capable of sustaining itself without proving to be a loss to the taxpayer (instead being a boon to all South Africans).

 

The PA would also encourage further competition in the banking sector and the credit sector as a whole.

 

In the immediate future, the PA would work to develop Post Bank to make it more competitive with private banks.

 

The PA contends that a state bank will stimulate the domestic economy and allow people to build their own houses and do the things with their lives that they want to and not necessarily always what the state thinks they should do.