For more than 20 years, Ithala Soc Limited has been working towards socio-economic transformation, especially by strengthening the rural economy. Ithala will continue to serve South Africans and assist them in managing their money and creating wealth, writes Dr Thulani Vilakazi, the CEO of Ithala Soc Limited.
The reappointment of Stella Ndabeni-Abrahams as minister of small business development is welcomed as she has fared well in her efforts to unlock the potential of SMMES and informal businesses mostly in rural areas and townships.
She has often said she was painfully aware of the socio-economic challenges that confront small businesses in rural areas where the burden of poverty and unemployment was felt more acutely.
Working with local government, traditional leaders, businesses and civil society, her department has been determined to address the challenges. Addressing a Ministerial Imbizo in KwaZulu-Natal in May 2024, Minister Ndabeni-Abrahams said that while there had been significant strides in transforming the rural economy, much more needed to be done to address economic imbalances.
She said her department would ensure development finance institutions were well-capitalised to provide concessional lending to small enterprises and social enterprises and develop their capacity to support regional development.
“The Department of Small Business Development carries a responsibility to ensure that small businesses and cooperatives are playing an integral role in achieving economic transformation in South Africa,” said Ndabeni-Abrahams.
The minister’s sentiments resonate strongly with Ithala Soc Limited’s often stated support for the concept of a bank for the people by the people. In a country with a history where most of its citizens were excluded from the mainstream economy and continue having limited access to economic opportunities and banking services, the realisation of the concept is paramount. Building an inclusive economy where all citizens actively participate, whether in a rural or urban environment, requires a mindset shift on providing banking services as a catalyst in achieving an inclusive economy.
For more than two decades, Ithala has been playing this role and has stood the test of time with all the challenges it has faced, some of which are a consequence of the legislative set-up it operates under, having to comply with the Banks Act, the Public Finance Management Act and a restrictive Banking License Exemption Notice.
The biggest beneficiaries of Ithala’s success and resilience to continue navigating the challenging territories are its customers, the people of KwaZulu-Natal, many of whom are from the deep rural areas and townships. We have played our role diligently, and we remain the only financial institution that operates the way we do, placing the needs and circumstances of marginalised people at the centre of how we provide financial services.
Ithala has provided finance of approximately R2.2 billion to people in the rural and township areas to buy a home, car, taxi, education and other essential needs.
The kind of work that Ithala has been doing also has a champion in Clem Sunter, the scenario planning guru who recently wrote that while we have got rid of political apartheid in South Africa, economic apartheid lives on 30 years after democracy.
Sunter hopes that the Government of National Unity will solve economic problems by listening to people on the ground about their priorities and building structures from the bottom up to accommodate their desires.
He places emphasis on financial support for small businesses. He does not see economic freedom coming from nationalising the land, the banks and the mines.
“It is all about giving township entrepreneurs, as well as young entrepreneurs elsewhere, the support and freedom to pursue their dreams of running a successful business in South Africa. Some might one day even spread their business beyond our borders and become a global phenomenon,” he said.
Sunter, who has written several best-selling books on scenario planning, said the government should invite a group of successful and experienced entrepreneurs to become an advisory panel to the president.
“They would inform him of the best ways to remove the red tape and make the township economies part and parcel of the mainstream economy. Specifically, I would want them to offer advice on how to construct a ladder whereby champions of the informal sector could transform themselves into formal businesses with greater opportunities for growth countrywide.
“In my recent conversations with budding entrepreneurs in the townships, the one issue that repeatedly arises is the lack of access to finance. Therefore, the top of my list would be to form a bank like the Grameen Bank in Bangladesh, which has specialised in small business loans for years without requiring collateral,” said Sunter.
Sunter’s dream is a reality at Ithala. We have banked the unbanked for more than two decades. Some of the homes we finance are on tribal land, where no other financial services organisation does.
We believe that a bank should play in being a catalyst for building an inclusive economy, creating wealth and transforming people’s lives. This is a role Ithala has played over two decades, and it is the role we will continue to play to transform people’s lives.