According to Enoch Godongwana, the finance minister of South Africa, they are considering establishing a housing bank to offer loans to those in the gap market and the public sector.
In an interview with CNBC Africa while attending the World Economic Forum’s annual conference in Davos, Godongwana discussed their ambitions for a housing bank.
He said that in order to establish a housing bank, the unions requested that the government duplicate the Government Employees Medical Scheme (GEMS).
We concur with the unions that we want to create a state medical assistance named GEMS in a manner comparable to how we did with medical aid, he added. In order to establish a housing bank and provide loans to public sector employees, a similar setup is required.
The government housing bank will also provide loans to the gap market — people who earn too much to get RDP houses and too little to get mortgages from banks.
Godongwana added that a fully-fledged state bank via the South African Post Office is also under development. “The challenge for a state bank was the regulatory framework. That regulatory framework is coming true,” he said.
“The second issue is sufficient instruments for a state bank. There are discussions about whether we should merge African Bank with the Post Office to create a bigger state bank.” He added that the regulatory framework for a state bank would be similar to the regulations for any other bank.