The KwaZulu-Natal government says the resignations come amid ongoing governance, compliance and operational challenges at Ithala SOC Limited, a subsidiary of the Ithala Development Finance Corporation.
Image: DOCTOR NGCOBO/Independent Newspapers
The KwaZulu-Natal Provincial Government has been hit by mass resignations of Ithala SOC Limited board members.
The move comes after the provincial government took decisive action to address the crippling financial instability that has been plaguing Ithala State-Owned Company Limited (SOC), which has affected its functioning as a financial services provider.
Due to its financial woes, especially in recent years, Ithala has received continuous negative publicity. It faced a liquidation application brought by the Prudential Authority due to its inability to secure a full banking licence.
Earlier this year, the bank ceased accepting deposits after its legal exemption to operate as a bank expired and a liquidation application was filed.
In a leaked letter seen by the Daily News, the MEC for Economic Development, Musa Zondi, stated that, following intense scrutiny over regulatory failures and governance issues, the KwaZulu-Natal Provincial Executive Committee (PEC) had adopted a series of measures aimed at stabilising the organisation and safeguarding its pivotal role in the province’s financial landscape.
The resolutions of the PEC came after it considered a report on the state of Ithala SOC Limited, which was tabled before it on 27 March 2026.
Zondi said that the PEC’s review highlighted critical concerns regarding Ithala SOC, including its inability to secure a banking licence within the set regulatory timelines and the non-renewal of the Prudential Authority exemption, which has left the institution susceptible to financial risks.
“With a failure to meet liquidity requirements and the withdrawal of licences by the Financial Sector Conduct Authority, the PEC felt compelled to intervene, recognising the profound implications for the provincial fiscus and its obligations to the National Treasury. In response to these alarming developments, the PEC has resolved to implement immediate and robust measures,” read an extract from the letter.
It further stipulated that the first step would be the closure of all banking branches, with “white-boxing” measures set to be rolled out. This involves terminating leases and dismantling infrastructure to effectively alleviate operational costs.
In a forward-looking move, the PEC has mandated the Ithala Development Finance Corporation (IDFC) to conduct a thorough skills analysis of its workforce.
The purpose of the analysis is to identify transferable skills and enable affected staff to be matched with vacancies across provincial departments, thereby ensuring a smoother transition within the public sector.
The PEC also stipulated that no new business ventures or expansions may proceed without credible, well-funded proposals, underscoring a commitment to financial prudence.
The report highlighted the necessity of transferring viable functions of Ithala SOC to the IDFC as an interim measure to ensure operational continuity. The transfer includes managing the existing loan book and supporting client repayment obligations that are pivotal in preserving the provincial asset base.
In its resolutions, the PEC called for mechanisms to protect Ithala SOC’s assets, including cession agreements for the loan book and cash reserves, to ensure alignment with National Treasury obligations.
According to the letter, a controlled funding framework is also to be implemented by the Department of Economic Development, Tourism and Environmental Affairs (EDTEA) in cooperation with the Provincial Treasury to bolster stabilisation efforts.
“The PEC clarified that these interventions are not aimed at dismantling Ithala’s developmental mandate but are rather focused on preserving its core assets while repositioning the institution within a compliant framework.
“Furthermore, the PEC is committed to exploring partnerships with private entities that hold valid banking licences, intending to restore full banking services compliant with the recent Financial Matters Amendment Act. Nonetheless, the PEC has stressed that the quest for an equity partner will only commence once the Prudential Authority resumes normal control, indicating that the restructuring process will be carefully monitored to align with relevant legislation and governance standards.”
KwaZulu-Natal Premier Thami Ntuli said in a statement that the developments form part of broader interventions aimed at repositioning Ithala as a credible and sustainable financial institution aligned with its developmental mandate.
He emphasised that the government has a clear understanding of the challenges facing Ithala and is focused on implementing practical solutions to restore stability and rebuild public confidence.
“As government, our objective is clear: to move Ithala from a state of recurring crises towards becoming an agile, responsive, and sustainable developmental institution capable of advancing financial inclusion, supporting small enterprises, and contributing meaningfully to inclusive economic growth across the province.”
Ntuli said that restoring Ithala will require not only institutional reforms but also transparent, consistent, and credible communication with stakeholders.
He acknowledged that communication gaps in the past contributed to uncertainty and mistrust and affirmed that his administration is committed to fostering a new culture of openness, engagement, and accountability.
“We are fully aware that communication with stakeholders has not always been at the level required, and we are determined to correct that. Communicating with stakeholders is not an option; it is a responsibility. Going forward, we will communicate more proactively and consistently,” he said.
"At some point the Department had to take a view to identify a team of high level consultants to assist with the turnaround strategy of Ithala SOC. It is therefore imperative that the Department must identify and finalise such an appointment as many people are left destitute by the bank's non-functionality," said an Ithala insider.
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