Brics bank open to financing South Africa’s state companies: report

The BRICS New Development Bank says it is open to funding South Africa’s state entities, after at least two privately-owned financial institutions publicly announced last week that they had stopped lending state owned enterprises.

According to a report by the SABC, vice president of the bank, Lesley Maasdorp, said that South Africa’s state owned enterprises are free to approach the lender for assistance.

Speaking to the SABC on the sidelines of the G20 Summit in China, Maasdorp said the institution was set up to help member states, including their public enterprises.

The BRICS Development Bank is a multilateral development bank established by the BRICS states – Brazil, Russia, India, China and South Africa. The bank is headquartered in Shanghai, China, with a regional office in Johannesburg.

On Wednesday, Futuregrowth Asset Management – South Africa’s largest private fixed-income money manager – said it would stop lending money to six state companies (including Eskom) 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.

It was followed on Thursday, by Denmark’s Jyske Bank, which told Bloomberg that it had also ‘pulled the plug’ on Eskom, citing concerns over governance.

“We pulled the plug on Eskom too yesterday,” the group told Bloomberg.

“(We) could easily see more lenders follow suit. We see issues on lending going forward and more governance issues.”

Matshela Koko, Eskom’s group executive for generation, told Business Report that the company has approximately R300 billion of debt on its balance sheet, with Futuregrowth holding only R4 billion of Eskom bonds. “Put differently, the execution of our funding plan of R327 billiongoing forward does not rely on Futuregrowth’s participation,” Koko said.

The ANC, meanwhile, described Futuregrowth’s actions as ‘unfortunate’.

“The ANC is concerned by the posture adopted by Futuregrowth. It is our hope that Futuregrowth will engage with the relevant ministries and parastatals to discuss the concerns they have; and together find a solution in the interest of the economy and country,” party spokesperson Zizi Kodwa said last week.

Kodwa called on other investors to wait for the outcome of interventions by its Inter-Ministerial Committee before taking any “pre-emptive stance” against SOEs.

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