Futuregrowth Asset Management, South Africa\u2019s largest private fixed-income money manager, is to stop lending money to six state companies because of governance and transparency concerns.<\/p>\n
Bloomberg<\/a> reported that the lender is concerned about how the state entities are being run in the wake of several public spats with Treasury.<\/p>\n The rand declined 1.75% to\u00a0R14.74 against the dollar shortly after 17h00 on Wednesday.<\/p>\n The media group reported that Futuregrowth, which boasts R170 billion in assets, halted plans to lend more than R1.8 billion to three state companies on Tuesday, citing CIO Andrew Canter.<\/p>\n The SOEs include:<\/p>\n \u201cWe\u2019ve observed recent reports that strongly hint of conflict between branches of South Africa\u2019s government, the possible machinations of patronage networks and a seeming challenge to the National Treasury\u2019s independence,\u201d Canter told Bloomberg.<\/p>\n “Any material risk to the state-owned entities\u2019 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\u2019 money.”<\/p>\n The government announced last week that president Jacob Zuma will lead a new panel to oversee all state-owned companies to ensure they help develop the country – a role previously delegated to Gordhan and other ministers.<\/p>\n Canter told Bloomberg that such a decision lacks clarity and context and creates uncertainty about who the companies will answer to.<\/p>\n \u201cIt is certainly not our desire nor intent to undermine their developmental missions, nor disrupt their ability to deliver,\u201d Canter said. \u201cBut we want to send a message that we can\u2019t provide finance unless the governance and decision-making of the state-owned entities improves and becomes more transparent.\u201d<\/p>\n 5 things the ANC wants you to know about Zuma, the Guptas and Gordhan<\/strong><\/a><\/p>\n Public spectacle of Hawks vs Gordhan is hurting the economy: Mantashe<\/strong><\/a><\/p>\n\n
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