The release of a R2.2bn guarantee from the National Treasury, meant to repay more than 270,000 depositors locked out of their savings at Ithala, remains in limbo as the KwaZulu-Natal government struggles to meet the strict conditions attached to the offer.
Treasury officials have made it clear that the funds will only be released once the province submits a comprehensive repayment plan and grants full access to Ithala’s loan book.
The loan book has remained sealed, with concerns mounting that politically connected individuals who received questionable loans may never be held accountable unless the records are opened.
On Friday, KwaZulu-Natal finance MEC Francois Rodgers confirmed that negotiations are at an advanced stage.
“Myself, the KZN premier Thami Ntuli and KZN MEC for economic development, tourism and environment Rev Musa Zondi have met both the president [Cyril Ramaphosa] and the minister of finance [Enoch Godongwana] on this matter,” Rodgers said.
“It is true that they [the Treasury] are requiring documents about the guarantee which we are currently working on. We are waiting for those documents on the repayment plan so that we can sign and allow the guarantee to be released.
“We have also conducted negotiations with another bank which will facilitate the payment for depositors so that they can access them [while Ithala is still closed].”
Ithala, which held deposits worth about R2.47bn, ceased operations on January 16 after its exemption under the Banks Act expired. The South African Reserve Bank’s Prudential Authority (PA) filed for liquidation, citing regulatory non-compliance.
As part of the process, the PA appointed Johannes Kruger as the repayment administrator (RA) to oversee the institution’s affairs and manage the repayment process. The move triggered a wave of litigation, with Ithala challenging the liquidation in the Pietermaritzburg high court.
Though the court initially ruled in Ithala’s favour, the PA and Kruger appealed, leaving the institution in limbo.
Among the troubling revelations is that about 10% of Ithala’s total loan book was issued to its own staff — far above international banking norms. The exact amount loaned to senior management remains unclear, but insiders say repayment records are patchy, with some loans still outstanding.
The crisis has had far-reaching consequences. Thousands of depositors — many of them pensioners — remain locked out of their savings. Workers have faced delayed salaries and uncertainty about their future.
Ayanda Zulu, provincial secretary of the National Education, Health and Allied Workers’ Union (Nehawu), which represents most of Ithala’s 400 staff members, said the union is bracing for another tense payday.
She said Ithala staff were paid their September salaries on October 1.
“This has been happening for a while now where workers who report to their work station every day were paid long after their payment dates, affecting their monthly commitments.
“As Nehawu, we have engaged our lawyers who are preparing our court papers because the employer has been continuously violating their contractual obligation to pay workers on time.
“Our members are also worried about their future employment, which neither the government, the PA, nor other stakeholders seem to take into consideration,” Zulu said.
Tholakele Ngwane, a depositor from Estcourt, said frustration is mounting.
“We were again protesting outside Ithala headquarters in Durban on Monday last week and nobody addressed us officially. The management said they are not even supposed to speak to us because, according to the RA, they are not supposed to operate.
“But others said they are waiting for the money from the National Treasury to release about R2bn so that we can be paid our money through other banks. We just don’t know who to believe anymore,” she said.
In early September, Ntuli announced a R300m rescue package to stabilise Ithala.
He said the funds are being used to pay staff salaries, settle debts with landlords of Ithala office properties and cover statutory obligations. As a result, Ithala’s toll-free lines have resumed limited operations, offering depositors basic updates, though no access to their funds.
Meanwhile, President Cyril Ramaphosa has signed a proclamation authorising the Special Investigating Unit to probe allegations of serious maladministration and corruption at Ithala Development Finance Corporation — specifically around tenders issued by the institution. The investigation will examine procurement irregularities and potential misconduct by officials.
The finance minister’s spokesperson Mfuneko Toyana said the minister remains committed to safeguarding the interests of Ithala depositors.
“A government guarantee is being finalised to support the orderly transfer of Ithala’s depositor book to a registered bank. While the process is at an advanced stage, final legal and technical arrangements are still being concluded between National Treasury, the KwaZulu-Natal provincial government, and the appointed bank.”
Toyana added that due to Ithala’s unique regulatory status — it is operating under exemption and not as a registered bank — “this intervention requires a tailored approach that ensures depositor protection within the appropriate legal framework.
“Once the guarantee is in place, depositors will be able to access their funds through a bridge bank, with the choice to remain with the appointed institution or move to any licensed bank.”
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