It was an unfortunate mistake to suspend loans to State Owned Enterprises, the ruling African National Congress (ANC) said on Thursday.
This comes hours after Futuregrowth Asset Management announced it was suspending its loans due to possible “patronage network” and “conflicts” in government.
“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.
Kodwa said it believed [that] Futuregrowth or other investor should wait for the outcome of interventions by its Inter-Ministerial Committee before taking any “pre-emptive stance”.
“Where there are challenges, these have been identified and, among others, interventions made to strengthen these institutions including the establishment of an Inter-Ministerial Committee chaired by deputy president Cyril Ramaphosa, to oversee their stability and reform, with specific focus on their governance frameworks.”
‘Good corporate governance’
Kodwa said the party was committed to ensuring SOEs are models of, “good corporate governance, independence and sound technical capacity is not in doubt.
“Where necessary, the ANC-led government must not hesitate to comprehensively respond and act on any concerns regarding their governance frameworks and institutional integrity,” he added.
Futuregrowth Asset Management chief investment officer Andrew Canter said it will stop lending money to six of South Africa’s largest state companies, Fin24 reported.
The companies are: Eskom Holdings,Transnet, South African National Roads Agency, The Land Bank of South Africa, The Industrial Development Corporation of South Africa and The Development Bank of Southern Africa.
Futuregrowth Asset Management, which has about R170-billion ($11.7-billion) in assets, shelved plans to lend more than R1.8-billion to three state companies Canter told Bloomberg on Wednesday, without giving more detail.
“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,” Canter said.
Fin24 reported that the rand was headed for the biggest weekly drop since December against the dollar as a statement of support by President Jacob Zuma failed to ease investor concern that finance minister Pravin Gordhan may be replaced.
The rand declined 4.8% last week. It's was set for the largest weekly slump since the five days through December 11, the period when Zuma fired then-Finance Minister Nhlanhla Nene and replaced him with little-known MP Des van Rooyen.
Gordhan's role as commissioner of the SA Revenue Service when an undercover investigation unit was established is being questioned by the Hawks, who are investigating whether the unit went rogue and performed illegal activities.
Some believe these allegations were cooked up as the unit was allegedly sniffing down the wrong Nkandla rabbit hole.