Minister surprised by money managers' move to withdraw SOE funding

Futuregrowth & Denmark's Jyske Bank announced their decision to stop giving loans to state-owned entities.

Public Enterprises Minister Lynne Brown. Picture: GCIS.

CAPE TOWN - Public Enterprises Minister Lynne Brown says she didn't expect money managers to withdraw funding from state-owned entities, given the positive financial performance some state-owned enterprises (SOEs) have shown.

This week, Futuregrowth Asset Management and Denmark's Jyske Bank announced their decision to stop giving any short-term loans to state-owned entities.

They have raised as concerns power struggles within government and the autonomy of Treasury.

Brown says Eskom, which is one of the affected SOEs, has managed to restore stability after a difficult period.

"Eskom has had great difficulty just a year ago - we had load shedding, we had board instability. In fact, Eskom has actually grown stronger."

She says there are other state-owned entities that are performing well, which she thought would be a positive indicator for investors.

"Now I'd imagine that this is a critical indicator for any international or national investor."

She says the decision taken by the money managers raises concern about the public perceptions being created about South Africa's SOEs.

Meanwhile, Old Mutual says while it respects the independence of its subsidiary Futuregrowth, it would have appreciated prior notice about the company's decision to withdraw funding for six state owned entities.

Old Mutual has distanced itself from the move, saying it holds a different view on parastatals.

Old Mutual's Dave Mcready says while there is no need for Futuregrowth to inform it about investment decisions, the move regarding state-owned entities is one that could have been discussed.

"It's probably not appropriate for them to communicate that decision in advance to ourselves, although I must admit it would have been quite useful to at least been informed because obviously this topic is extremely sensitive."

Eskom's Khulu Phasiwe says the parastatal wasn't aware of any concerns from Futuregrowth.

"We're going to have another meeting with Futuregrowth. This will be the second meeting since the last one that we had with them in August this year, basically just to understand what their concerns are."