Finance Minister Nhlanhla Nene has described the placement of lender African Bank under curatorship by the South African Reserve Bank (Sarb) as a reminder of the urgency with which South Africa’s financial services sector required improved oversight and strengthened regulations.

“[While] no financial sector regulatory regime can prevent failure of all financial institutions, effective policy includes the resolution of financial firms in trouble in a way that imposes losses on those investors who profited from that firm’s activities, and who were in a position to exercise influence over that firm’s management.

“The events that culminated in [the] curatorship of African Bank are a powerful reminder of the urgency of the work currently being done by National Treasury to strengthen financial sector oversight,” he told delegates at the seventeenth Southern African Internal Audit Conference on Monday.

Reuters reported on Sunday that African Bank had been placed under curatorship as part of a rescue plan that would include a R10-billion capital injection, which would be underwritten by a consortium of South Africa's major lenders.

Nene, meanwhile, advanced that many of the priorities identified in the National Development Plan (NDP) were not focused on new programmes, but rather on improving the quality of implementation of existing policies – including those in the financial services sector.

He added that government recognised that it was operating in a constrained fiscal environment and, as such, its current fiscal programme sought to stabilise the growth of debt and restore fiscal sustainability.

“Weaker growth outcomes, higher inflation and rising interest rates will place additional pressures on this fiscal programme. But the expenditure ceiling identified in the last budget remains in place and, if this proves insufficient, additional measures will be considered to meet our fiscal objectives,” he commented.

Elaborating on government’s cost-containment focus in the period ahead, the Minister said this would be guided by the medium-term strategic framework (MTSF).

National Treasury and the Department of Performance Monitoring and Evaluation (DPME) in the Presidency would continue to work together to ensure that the commitments made in the MTSF could be funded within the given resource constraints.

“Given the constrained fiscal environment, government will need to do more with less. Earlier this year, National Treasury issued a set of cost containment guidelines that limit spending on nonessential goods and services budgets.

“Means of strengthening this work are under consideration, and particular attention will be paid in the next budget to line items that are not critical for service delivery or MTSF objectives,” he commented.

He added that, where possible, resources would be redeployed to achieve the same outcomes through improved delivery models, changed institutional arrangements or improved policy frameworks.

“For instance, where appropriate, [we will establish] partnerships with the private sector or between a group of public agencies,” he noted.

To support this reprioritisation of resources, Treasury and the DPME were conducting a series of in-depth expenditure reviews aimed at improving allocations on the basis of evidence of programme effectiveness.

The expenditure reviews would assist government to identify inefficiencies, realise savings and redirect resources to priorities.