ANC supporters. Picture: REUTERS
ANC supporters. Picture: REUTERS

Old Mutual-linked financial services company Futuregrowth Asset Management has raised the issue of my roles as both an ANC national executive committee (NEC) member who chairs the party’s economic transformation committee and as the nonexecutive chair of the Development Bank of Southern Africa (DBSA).

This is easily addressed. No law has been infringed by my holding these positions. I am an ANC member who has been elected to leadership positions, but I am not an employee of the ANC or any government department. As a board member of the DBSA, I am guided by the same fiduciary duties as other board members. I follow the same good governance principles as my fellow board members, and if and when any conflict arises it will be dealt with formally, in the same manner as such conflicts would be dealt with by other board members.

Development finance institutions must be held to the same governance standards as publicly listed companies — the boards of such institutions must act in the best interests of all stakeholders, funders, employees and suppliers. There are many people in SA in the category of “politically exposed persons” or “domestic prominent influential persons”, and a rigorous system of compliance is required by law to ensure the proper regulation of their activities.

It was never the intention of the relevant legislation — such as the Financial Intelligence Centre Act — to preclude such persons and their family members from conducting their daily lives and the honest pursuit of their livelihoods. What is required by the legislation is the kind of enhanced scrutiny that allows for the careful assessment of the sources of wealth and funds of such persons.

It is in this context that the proper regulation of the activities of politically exposed persons via the compliance systems of the banking and financial sectors is of fundamental importance, and such persons should be prepared to submit themselves to lifestyle audits to help stamp out corruption.


Since 2012, the World Bank has published surveys about development finance institutions such as the DBSA. Its 2017 report assessed a number of key features of such institutions, including their ownership, mandate and governance practices.

It was found that the government fully owned 85% of those surveyed and 10% had minority private sector participation of 1%-49%. It was further found that 75% of such entities were established by legislation and 25% were set up as companies.

These institutional differences have important implications for the mandate and governance of development finance entities. Historically, development finance institutions have been established for economic reasons, such as to address scarcity of financing and to deal with other market failures.

Governance structures

Some institutions have narrow, specific mandates, such as infrastructure development, promoting small, medium and micro enterprises (SMMEs) or mass housing. Some have broad mandates, formulated in general terms without reference to any particular sector, such as promoting social and economic development. Mandates are typically reviewed from time to time to ensure institutions remain relevant and continue to be fit for purpose even under changing circumstances.

Worldwide governance structures of development finance institutions are complex and are typically integrated with political oversight mechanisms. The World Bank report found that in 74% of the cases, a government entity, such as the ministry of finance or president of the country, appoints board members of development finance institutions, and in 54% of cases, CEOs are appointed in a similar manner.

In line with this, the DBSA board is appointed by the finance minister after approval by the cabinet. Over time, SA’s various finance ministers have used different mechanisms to ensure transparent and fair appointment processes. Some have used advertisements and then made recommendations to the cabinet. Others have used executive search companies to find candidates to recommend to the cabinet.

The DBSA, like most development finance institutions, is not capitalised by the state and as such it must go to the markets to raise capital. In the competitive environment for scarce resources, the DBSA has to meet stringent governance protocols comparable to its private sector competitors.

Infrastructure fund

The DBSA thus has long-established and strong processes for managing any conflicts of interests that may arise for its board members. Good governance is at the heart of the DBSA’s work. This is a situation I inherited when I became DBSA chair — I lay no claim to it.

The ANC and the government have decided to put infrastructure at the centre of the country’s economic recovery plan. We do need to be careful that the DBSA — not Enoch Godongwana — does not find itself in a conflicted situation. Correctly, there is a concern that it may not be appropriate for the DBSA to house the infrastructure fund because the institution may wish to participate in funding some of the planned infrastructure projects.

This matter has been raised by the banks and the Association for Savings and Investment SA and by the National Treasury. The DBSA is alive to this criticism and is of the view that these concerns should be considered in deciding how the infrastructure fund is ultimately housed and institutionalised.

It is not the first time ANC leaders have been deployed to a state entity. One of my predecessors as chair of the economic transformation committee was appointed CEO of Denel. In another case, Saki Macozoma, a member of the ANC’s NEC, was deployed as group CEO of Transnet. A notable difference is that in my case I am serving not as an executive but in a nonexecutive capacity for the DBSA.

In the examples cited above, we never experienced any conflict of interest problems. In fact, quite the opposite; the debilitating problems of corruption and state capture did not arise while these respected comrades served as leaders of our public entities.

• Godongwana chairs the ANC’s economic transformation committee and is nonexecutive chair of the DBSA. He writes in his personal capacity.

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