Picture: THE TIMES
Picture: THE TIMES

Trade union federation Cosatu has resuscitated a former resolution to establish a workers’ bank, in a move that could shake up existing ownership patterns in the financial sector.

The move is meant to ensure that workers have access to credit facilities, for which they often do not qualify at the country’s four major banks.

Several studies by the Public Service Commission have found that most public servants, who are mostly Cosatu members, are over-indebted and are not eligible for home loans.

On Thursday, the federation announced that its central executive committee decided this week it should undertake research to explore the workers’ bank model. “This is our old resolution that is very necessary now that we are faced with an economic crisis. Workers have no say in how the current commercial banks should benefit society,” said Cosatu general secretary Bheki Ntshalintshali.

The decision to form a workers’ bank stems from a 2009 Cosatu national congress at which it was resolved to put in place a process that  would result in the establishment of a workers’ bank.

Although at the time U-Bank, formerly Teba Bank, was identified as the ideal vehicle for the implementation of the resolution, the plan fell flat as Cosatu affiliates jostled for equitable shares in the entity.

The bank, which mainly operated in mining areas, was formed in the 1970s to assist miners who were mostly migrant labourers to send money back home.

The current push for the establishment of the workers’ bank comes in the wake of the collapse of VBS Mutual Bank, which was pillaged by some of its investors, politicians and government officials. The liquidated VBS was one of the country’s long-standing black financial institutions in a sector that is predominantly white-owned.

Cosatu leaders said its affiliates, which own billion-rand investment companies, would explore using union funds to raise capital for the venture.

The organisation’s first deputy president, Mike Shingange, said they will also begin the licence application process.

“We have seen people who are on the opposite of our class content accessing banking licences. We resolved to pull together and use the power that we have. We have about four unions today that own credit and savings cooperatives,” he said.