A senior member of the governing African National Congress (ANC) has expressed fear about the fate of the ANC and the country in the nearest future. Just as the rift between the state’s treasury and the government continues, another asset management company, FutureGrowth opted to stop lending to state-owned entities.
The company pointed out that their decision follows how the infighting and undermining of the Treasury could affect the state’s economy.
To this, the ANC senior member warned the ruling party to address the current political issues for the benefit of the country’s future. His warning came after Denmark’s Jyske Bank became the second money manager after FutureGrowth that said it would not lend to Eskom.
“We pulled the plug on Eskom, too, yesterday,” Rune Hejrskov, senior money manager at the Silkeborg, Denmark-based bank said.
“I could easily see more lenders follow suit. We see issues on lending going forward and more governance issues.”
Economists also called on government to intervene to prevent a December ratings downgrade.
According to news by Timeslive, South Africa’s biggest specialist fixed-income manager, FutureGrowth, said it had withdrawn its plans to lend more than R1.8billion to three of the state companies following the discord between Zuma and the finance minister Pravin Gordhan among many other issues.
To this, Andrew Lapping, Allan Gray’s chief investment officer, said “We hope the current uncertainties and governance concerns will soon be resolved as this will likely impact our views on the attractiveness of state-owned enterprise debt as an investment.”
Political economist Daniel Silke also noted that the company’s moves “represented further erosion in confidence in corporate governance in the SOE sector and erosion of confidence in relation to rising political risk in the country”; while Azar Jammine, another economist said the decision was clearly a revolt by the private sector against perceived state capture by people close to Zuma.
South African Chamber of Commerce and Industry CEO Alan Mukoki said he was concerned about how FutureGrowth’s decision would affect developments but he said he had a wait-and-see attitude towards it.
Meanwhile, Eskom spokesman Khulu Phasiwe said the utility recently went on a national roadshow to meet asset managers and financial institutions informing them of future plans.
“Following FutureGrowth’s statement we will return to the asset managers and other investors to hear their concerns and find ways to resolve them. We will do the same with international investors.”
To the ruling ANC, FutureGrowth’s decision was somewhat irritating. The party said it wants the company to reconsider its decision, but that it was making plans to address the current state’s political situations in a way of addressing the state’s economy.