The failure of Ithala, the development financier owned by the KwaZulu-Natal government, is another reminder of why the government’s much-vaunted plan of launching a fully fledged state bank is lofty and a bad idea.
To recap, Ithala is facing a liquidation application in court from the SA Reserve Bank’s Prudential Authority, which regulates banks and other financial institutions in South Africa. The Prudential Authority has been worried about Ithala’s governance affairs and has been patient with it for years. Ithala has been operating under the radar as its financial status remained unknown, and it was even unknown how at risk the company was of collapsing.
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