DYSFUNCTIONAL GOVERNANCE
HILARY JOFFE: Futuregrowth’s report is a reminder of how urgent reform is at SOEs
The process of reforming state-owned enterprise governance has hardly begun and is an urgent imperative
Amid the euphoria that followed President Cyril Ramaphosa’s late-night cabinet reshuffle in February, asset manager Futuregrowth quietly released the report SOE Governance Unmasked. The response has been relatively muted, but it’s easy to forget just how important was the event that prompted Futuregrowth to produce the report — and just how much of a turning point that was. When Futuregrowth went public in August 2016 on its decision to suspend lending to six state-owned enterprises (SOEs), it was the start of a process in which the discipline of the market was brought to bear on wayward SOEs and their shareholder. It put the spotlight on the dysfunctional governance of SOEs. Arguably it opened the way for the ensuing stern action when the full extent of the corruption and capture of the SOEs began to emerge during 2017, when bankers and investors sanctioned the likes of South African Airways (SAA) and Eskom by pulling lines of credit and closing off access to capital markets. Their...
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