A collection of Futuregrowth thought leadership pieces, media articles and interviews.

The SOE debate: the lead up to SOE Governance Unmasked


At the end of August 2016, we made a public statement to temporarily suspend lending to the six largest State-Owned Enterprises (SOEs) (Land Bank, DBSA, IDC, SANRAL, Eskom and Transnet) until we could conclude in-depth governance reviews.

(Filmed in October 2017) **

This followed a creeping sense of governance degradation at various SOEs, culminating in clear signs of possible corruption, and evident conflict within the government itself. While seen as controversial at the time, it has subsequently become evident that good governance of SOEs is critical. After that announcement, our credit team engaged with most of the named SOEs to conduct detailed governance due diligence towards the goal of being able to advance new funds. The public letters containing the results of our completed governance due diligence for Land Bank (26 September 2016), IDC (4 November 2016), DBSA (21 November 2016) and SANRAL (5 July 2017) are available on our website.

We built a robust analytical response to assess the SOEs, and over the past 18 months we have had the opportunity to engage with the essence of corporate governance: To understand the difference between “governance on paper” versus “governance in practice”. Events during this period have re-affirmed our view that good governance is much more than a mere “tick-box” exercise. Crucially, the “who” and the “how” of governance deserves appropriate scrutiny and disclosure. Good governance is inextricably linked to Responsible Investing, and in our view, it is key to ensuring that public entities, mostly funded with public money, are sustainably managed for the long term and are able to deliver on their developmental mandates.

Futuregrowth has done the work but we believe it is suitable to share our learnings with others to make a lasting difference in public capital markets and effect positive change in South Africa. The learnings have been captured in a document, SOE Governance Unmasked. Olga Constantatos, Credit & Equity Process Manager at Futuregrowth, says, “We believe this document can play a role in helping the industry invest responsibly and keep clients’ money safe.


**Note: since the filming of this video in 2017, we have engaged successfully with some of the SOEs as well as the JSE on improving governance, and investor protections and company disclosure in the debt capital market in South Africa.