The financially stressed Ithala customers will breathe a sigh of relief following the political agreement between the KwaZulu-Natal ANC leadership and the national government to save the bank from liquidation.

On Tuesday, the ANC leadership said that after an engagement with Finance Minister Enoch Godongwana, it was agreed that the bank will not be liquidated and the minister will fully guarantee all depositors.

“Faced with this looming crisis, the ANC in KwaZulu-Natal, under the leadership of the Provincial Working Committee (PWC), engaged in decisive and strategic interventions.

“As Provincial convenor, I, together with coordinator Cde Michael Mabuyakhulu and the collective leadership of the PWC, engaged directly with the Minister of Finance, Comrade Enoch Godongwana, to seek a sustainable solution.

“Our intervention was firmly aligned with the ANC’s developmental agenda and our responsibility to protect institutions that uplift the people. We are pleased to report that, following these engagements, a breakthrough was reached: Ithala Bank will not be liquidated,” read the statement

Mike Mabuyakhulu, the party’s coordinator, said the bank has, for decades, played a vital role in supporting the livelihoods of the most vulnerable and historically marginalised communities in the province.

He stated that it was established not merely as a financial institution, but as a developmental vehicle, to empower township and rural economies, support small businesses, and provide accessible banking services to those excluded by the mainstream financial sector.

However, in recent years, it has faced a number of governance and regulatory challenges. These include serious concerns raised by the Prudential Authority and the South African Reserve Bank, culminating in legal action that placed the bank at risk of forced liquidation, stating this would have posed a devastating threat to the economic futures of thousands of families and small businesses across KwaZulu-Natal.

To ensure the long-term viability and sustainability of Ithala, Mabuyakhulu said the ANC has proposed several practical and actionable steps, including:

• Strengthening governance and internal controls within Ithala.
• Enhancing compliance with national banking and regulatory frameworks, exploring strategic partnerships that preserve its developmental mandate.

Furthermore, he said a turnaround strategy focused on transparency, accountability, and performance will be launched, as well as ensuring continuous engagement between the provincial and national government structures to reposition Ithala as a Development Finance Institution (DFI)

Reacting to the news, the Zulu royal family spokesperson, Prince Thulani Zulu, said that although the royal family is happy to hear it, it will wait for formal communication from the provincial government about the decision.

In February, King Misuzulu kaZwelithini called an imbizo with amakhosi to fight the bank’s liquidation.

The bank was in a protracted legal battle with the SA Reserve Bank’s Prudential Authority (PA), which had filed for provisional liquidation in the Pietermaritzburg High Court.

The PA argued that the bank was not complying with financial regulations, which included that it was operating as a bank without a banking licence. This was after the PA had not renewed Ithala’s exemption certificate, which allowed it to operate without requiring a banking licence.

willem.phungula@inl.co.za

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