Time to scuttle Ithala

Johann Krog, MPP

Democratic Alliance

Despite claims that its finances are improving, Ithala Bank remains in a very precarious position with the development bank’s current loan book sitting at R2.2 billion while impaired loans are up from R483 million to R525 million.

The figures form part of the Department of Economic Development and Tourism’s annual report for 2012/13, the subject of discussion at a Scopa hearing held earlier this week in the provincial Legislature.

The bank is sitting with a R42million increase in impaired loans and a R28 million increase in total loans.  This is a clear indication that old practices are being upheld which continue to force National Treasury to set stringent trade requirements for Ithala.  The figures also make it clear that Ithala is still lending money to clients without good credit security.

Alarmingly, MEC Mike Mabuyakhulu has commented that his department is “inspired” by the audit outcome for 2012/13.  Given the Ithala statistics it is hard to believe that the MEC can be so upbeat.

The development bank is a constant drain on the provincial coffers.  Last year, the KwaZulu-Natal Treasury was forced to step in with a loan of R105 million.  Meanwhile Ithala still owes government R800 million.

Ithala was once a profitable entity. The former CEO has admitted under oath that poor lending decisions over the past five years will see many years of future losses.

It is time that KwaZulu-Natal’s ANC leadership made a decision and scuttled this sinking ship.