Much has been made in the news recently of the demise of African Bank, with the Reserve Bank essentially helping out the bank.  What they have done is to take the R7 billion worth of debts that African Bank has, which seems unlikely to be recovered and they have bought that.  That enables African Bank to be in a far stronger position and the shareholders of the bank not to use as much money as they would have if the company was still saddled with that debt.  Much less however is being made about who ends up owning that debt and because the Reserve Bank has bought it, and we fund them, it is all of us.  

In other words, because African Bank lent money to large numbers of people, probably in a reckless way, and are now not able to collect that money, we have all paid out African Bank for that to keep it afloat and perhaps have less risk to the system and now we have to hope that the Reserve Bank or whoever is going to be doing the collecting on behalf of the Reserve Bank manages to get that money, or at least some of it, back from the creditors – the man in the street who has been lent money he could not afford to repay.  If they don’t, and African Bank would not be in trouble if it was easy to collect the money, then that is another R7 billion divided by 4 or 5 million taxpayers, we will all be paying in one way or another.  

It is just a reminder again that policy decisions or business decisions that we read about in the media which seem to boring and which generally would not interest anybody, are or great interest – because the next time you get a tax increase or fuel levy increase it is just one more of the mistakes you will be paying for and this time you are paying for the mistakes of a business and there are good reasons to ask why on earth we as taxpayers should be paying for that business’ mistakes?  Why cannot the shareholders in that business pay for it and lose their money, rather than us as taxpayers have to cough it up?