ANC responds to major lender’s decision to cut off 6 state firms

The ANC says that Futuregrowth Asset Management’s decision to suspend loans to a number of State Owned Enterprises (SOEs) such as Eskom and Sanral is “unfortunate” and based on “erroneous” views.

In a statement released on Thursday (1 September) the party said that the generalization that corporate governance challenges beset Eskom, Transnet, Sanral, the Land Bank, Industrial Development Corporation (IDC) and the Development Bank of South Africa (DBSA) is wrong.

“Where there are challenges, these have been identified and, amongst others, interventions made to strengthen these institutions including the establishment of an Inter-Ministerial Committee (IMC) chaired by deputy president of the Republic, Comrade Cyril Ramaphosa, to oversee their stability and reform, with specific focus on their governance frameworks,” the party said.

“Accordingly, we believe that Futuregrowth, or other any investor, should await the outcome of these interventions before taking any preemptive stance.”

On Wednesday, Futuregrowth Asset Management – South Africa’s largest private fixed-income money manager – said it would stop lending money to six state companies because of governance and transparency concerns.

“We’ve observed recent reports that strongly hint of conflict between branches of South Africa’s government, the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence,” the group told Bloomberg.

“Any material risk to the state-owned entities’ governance, budgeting and approval processes for spending or lending must impact on our forward-looking credit assessments. It is difficult to make reasoned and defensible decisions to continue providing state-owned companies with additional funding using clients’ money.”

The company said it has suspended negotiations on over R1.8 billion debt finance to three different SOEs.

For now, the decision would not affect lending to the government and other state bodies such as water boards and municipalities.

The announcement by Futuregrowth comes amid a number of investigations into Eskom and its multi-million rand contracts with Gupta-owned Tegeta Exploration. The company has also clashed with Eskom over its stance on renewable energy.

The Guptas have been the centre-point in claims of state capture, where it is alleged that the family used its ties to president Jacob Zuma to secure lucrative contracts with South African state-owned companies.

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ANC responds to major lender’s decision to cut off 6 state firms