Bleak moves for the country

WE sincerely hope that Andrew Canter, chief investment officer of Futuregrowth Asset Management, is wrong – that other money managers might follow his firm’s lead in stopping further loans to our state-owned enterprises.

Denmark’s Jyske Bank was the second and it, too, “could easily see more lenders follow suit”. Will there be more who are so deeply concerned at the politics and governance of the Zuma administration that they stunt their own growth by refusing new dealings with its enterprises?

According to economists Dawie Roodt and Azar Jammine, other funders are restless. They fear a domino effect.

The freezes on new business escalate widespread criticism of machinations and tensions in the government to an immediate, tangible price for the country.

The first jolts for South Africa came from prominent credit rating agencies, as of now a problem that seems likely to worsen. Now this, shunning any more exposure to state-linked businesses.

Uncertainty dominates Futuregrowth’s reasons. The tussle over the Treasury, and with Finance Minister Pravin Gordhan, unsettled it. The “sudden” announcement that President Zuma would chair a council overseeing the state-owned enterprises also did, even more so.

It needed to know more than that scant statement, it said. Was it a good or bad move? “In an environment of ‘ we don’t know’, we don’t lend money...” Canter told Biznews.

“We cannot provide finance without having clearer sight of, and comfort around, the governance and decision-making of the SOEs,” he said.

From government and ANC remarks, it is clear some among them grasp the harm of their internal battles. The loan freezes vindicate their concern, they are alarming.

Turning away government business is extremely ominous for the country, and should be especially so for those running it.