1. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development South African Postbank Bill, 2009 Ministry of Communications 11 November 2009 1

2. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Introduction  Postbank is a financial services division of the Post Offices around the world  It aims to give mostly isolated communities access to vital financial and related services and thereby contribute to their economic and social development  SAPO has been offering financial services, since its incorporation, including money order and postal orders services  Postbank was established in terms of the Post Office Act, 1958 (Act No. 44 of 1958) as a division of Post Office and under the control and management of the Post Office  Currently, regulated under the Postal Services Act 124 of 1998 and has special exemption from the application of the Banks Act provisions, which imposes high entry barriers in terms of capital, liquidity and reserves requirements 2

3. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Introduction..  This would have impeded the Postbank meeting its government obligation of providing services to the rural and unbanked population  Postbank used as a deposit taking and saving division of the South African Post Office 3

4. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Background  White Paper on Postal Policy (1996) provides a framework for the restructuring of the Postbank, which include the corporatisation of the Postbank as a subsidiary wholly owned by SAPO or Government, with an ultimate aim of becoming a fully-fledged bank  In 2005, Memorandum of Understanding (MOU) was entered into between the Ministers of Communications and Finance on the restructuring and corporatisation process  The policy and agreement spelt out the governing principles and the process to be followed in the restructuring and corporatisation of the Postbank.  Working Committees comprising of representative from the Department of Communications (DoC), South African Post Office (SAPO), Postbank, National Treasury and Reserve Bank were established to work on the finalisation of the process. 4

5. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Background …  The DoC tasked with the developing legislative framework to facilitate the corporatisation process.  National Treasury, SAPO and Reserve Bank also working on other prudential requirements to ensure proper implementation of the process 5

6. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Strategic focus of the Bill  To create a legislative framework that facilitate the incorporation the Postbank division of the Post Office as a public company wholly owned by Post Office and for the company to be registered and operate as a bank  Allows for the establishment of financial institution for mass mobilization of savings and investment from a broad community, particularly to communities that have little or no access to commercial banking services and facilities by making available accessible payment and savings through Post Offices and other outlets  This is also to provide an improved and expanded role of the Postbank and to strengthen the savings prosperity of wide segments of the rural community. 6

7. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Strategic focus of the Bill..  Postbank is recognised as a financial institution best suited to take lead in satisfying the savings needs of rural and poor communities of South Africa  Postbank therefore needs to balance its developmental obligations with the need for financial viability and sustainability  The legislative framework will facilitates Government intervention in the postal financial sector in line with the developmental State 7

8. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Summary of the Bill  The Bill is divided into 6 Chapters, namely  Chapter I-Interpretation & Objects of the Act  Chapter II-Incorporation and Transfer of the business  Chapter III-Ownership & Powers of the Company  Chapter IV-Control & Management of the Company  Chapter V-Funds and Financial Account of the Company  Chapter VI- General & Miscellaneous 8

9. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter I Interpretation & Objects of the Bill Interpretation  Provides for the definitions of words as they will be used in the legislation for better understanding and interpretation Objects The objects of the South African Postbank Bill, 2009 are to:  Provide for the incorporation of the Postbank Division of the Post Office into a public company wholly owned by the Post Office with the aim of:  conducting the business of a bank that will encourage and attract savings amongst the people of the Republic; 9

10. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter I Object Cont…  rendering transactional services and lending facilities through, amongst others, existing infrastructure of the Post Office; and  for the company to develop into a bank of first choice, particularly to communities that have little or no access to commercial banking services or facilities  Provide also for the governance and functions of the Company and for the transfer of the enterprise of the Postbank division of the Post Office to the Company 10

11. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter II Incorporation and transfer of the business  Proves for the establishments a legal framework that facilitates for the incorporation of the public company and for such company to be a wholly owned subsidiary of SAPO  Empowers the Minister or such other person delegated by the Minister to sign the Memorandum and the Articles of Association and all other documents necessary for the formation and incorporation of the company  Further makes provision for the company to be registered as a bank after it has satisfied the requirements of the Banks Act.  Further empowers the Post Office to determine the extent of the business to be transferred to the Company and for such business to be audited by an auditor appointed by the Minister 11

12. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter II... Incorporation and transfer of the business  Provide for the said auditor to attach a monetary value in determining the extent of the Business of the former Postbank  It further empowers the Minister to determine a date or dates for the transfer of the Postbank to the Company by notice in the Gazette  It further makes provisions for the management, control and operation of the Postbank to be transferred to the company as well as the business and personnel of the Postbank, subject to schedule 1 of this Act.  It also empowers the Minister with the concurrence of the Minister of Finance to determine the value of business of Postbank for purposes of finance prescripts. 12

13. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter III Powers and Duties of the Company  Provides for the powers that the Company shall have to enable it to realise its objectives as set out in section 2  Places a duty on the Company and the Post Office to conclude an agreement which will govern the corporation between the company and the Post Office with the concurrence of the Minister and the Minister of Finance  The agreement to include amongst others, terms and conditions relating to the utilization of the Post office infrastructure by the Company  13

14. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter IV Control and Management of the Company  Provides for the establishment of a Board that will control and manage the company  Empowers the Minister to appoint members of the Board with the concurrence of the Minister of Finance and the Post Office and further outlines the process to be followed in appointing the Board members  Further provides for the composition of the Board and their qualifications and for the disqualification of any person to be appointed as a Board member  It further outlines the functions of the Board as mainly to give effect to the corporate plan of the company in line with the PFMA and guidance to the Managing Director and the personnel of the company  It further places an obligation on Board members to disclose their financial interests and fiduciary duties before and after appointment as Board member 14

15. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter IV... Control and Management of the Company  Further prescribe on how to deal with resignations, removal from office of Board member and vacancies within the Board  Empowers the Board to appoint committees necessary to assist in the realization of the company’s objectives and to delegate any of its powers to such committees  Provide further for the appointment of Managing Director of the company by the Board subject to the Minister’s approval  Provide for the Managing Director to be the Board member by virtue of office  Makes provisions for the Board with the concurrence of managing director to appoint personnel to perform work related functions and further determines their conditions of service, remuneration and service benefits. 15

16. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter IV… Control and Management of the Company  It further empowers the Minister with the concurrence of the Minister of Finance and the Post Office to intervene when the Board is unable to perform its functions in terms of this Act and appoint an administrator where necessary.  Provides for limitation of liability unless the Company acted unlawfully, grossly negligently or in bad fait.  Further provides for the process of submitting annual report by the Company to the Minister 16

17. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter V Funds and Financial Accounts of the Company  This chapter provides for what will constitute the funds of the Company  It empowers the Minister or any officer authorised by the Minister to inspect financial accounts and documents of the Company and for the Company to furnish any such information as and when required by the Minister.  Provides further for the Company to be subjected to the application of the Public Finance Management Act 17

18. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter VI General and Miscellaneous  This chapter empowers the Minister, on recommendation of the Board to develop regulations with the concurrence of the Minister of Finance  Makes provision for the Companies Act to be inapplicable to the Company and empowers the Minister to request the Minister of Trade and Industry to declare any provision of the Companies Act to be inapplicable to the Company.  It further provide for the transitional arrangement to allow the Postbank to continue to function without interruption until certificate in terms of this Act to commence business is issued 18

19. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Chapter VI.. General and Miscellaneous Cont…  Provides further for the repeal of laws mentioned in Schedule 2 to the extent set out in the third column of that schedule  Provide for what this Act shall be called (short title) and commencement date of this Act Schedule 1  Outlines the procedure to be followed in the transfer of personnel currently working with the Postbank division of the Post Office as contemplated in section 7 Schedule 2  Provides for the repeal of Sections 51(1), (2) (3) and (4), 52, 53, 55 and 58 of the Postal Services Act, 1998 (Act No. 124 of 1998) 19

20. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Conclusion  In conclusion, the Department believes that, the Postbank has become extremely important in the realization of integrated services delivery and to ensures that ordinary people participate in the economic activities, irrespective of their physical location or financial background  This legislative framework is therefore aimed at establishing a company that will develop into a bank of first choice, particularly for communities that have little or no access to commercial banking services or facilities  Will also ensure that the company as a Bank comply with the critical financial services sector regulations and is supervised accordingly 20

21. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development THANK YOU 21'SECRET'