New Age2.png Futuregrowth plays politics Asset managing entity in possible collusion with incumbent and former finance ministers to influence policy Andile Mngxitama, The New Age, Johannesburg, 8 September 2016 South Africa's inter governmental wars have reached a new plateau with the announcement by Futuregrowth to suspend "any additional loans" to some state owned enterprises (SOEs). In particular it has identified Eskom, Transnet, Sanral, Landbank, IDC and DBSA as its first targets. This move is akin to strangulation of the SOEs because Futuregrowth is regarded as a substantial funder of the South African SOEs. Futuregrowth said the decision to take such drastic steps which includes "the suspension of new loans and roll-overs of existing debt. We have now suspended negotiations on more than R1.8bn of debt finance to three different SOEs." This decision is by all accounts disastrous to the life of the SOEs. Many sources have raised the question of whether these drastic actions are justifiable. The reasons provided by Futuregrowth for its actions are not purely economic but deeply political as well. It cited among others that, its decision was motivated by "reports" which "strongly hint of conflict between branches of South Africa's government, the possible machinations of patronage networks and a seeming challenge to the independence of the national Treasury". Links to factions This is tantamount to acting on speculation and media reports. The most troubling factor is that the decision by Futuregrowth implicates the Treasury. Links between the decision of Futuregrowth and factional battles inside the ANC cannot be discounted. For instance, Trevor Manuel who is the former minister of finance has come out publicity to support Pravin Gordhan, is also the chairperson of Old Mutual a major shareholder in Futuregrowth. Old Mutual sources lots of funding from within the Treasury system such as PIC and IDC. This creates a potential unethical situation where Treasury funds are indirectly being used to punish SOEs. Futuregrowth has in its assets funds sourced from the public through the shareholding of Old Mutual. It's not a small matter that Trevor Manual is the chairperson of Old Mutual. A reasonable inference can be made that Futuregrowth's withdrawal of funds is at the behest of its major shareholder partner, Old Mutual. This would mean that Treasury funds are being used to fight factional battles, but more importantly to create a massive uncertainty in the economy which can be seen as sabotage. The demise or deepening of the crisis of SOEs as a result of the sudden withdrawal of credit lines would lead to strengthening the calls for privatisation, a policy option favoured by the pro-business faction. This is tantamount to sabotaging the economy to impose particular policy outcomes. Futuregrowth's decision will play a big hand wittingly or not in the battles between two factions of the ruling party over police direction. Firstly, Finance Minister Pravin Gordhan is seen as a candidate of private capital and to ensure the implementation neo-liberal policies which favour big business are sustained. Anti-BRICS, pro-BRICS Black First Land First, a black consciousness movement, has opened a criminal case against some of the captains of industry and bankers who are said to have pressurised the ruling party to appoint Gordhan last December. This is a violation of the law. The organisation also has lodged a similar case with the public protector. The faction pitted against the pro-business faction of the ANC led by Pravin Gordhan is the "pro BRICS" faction led by state President Jacob Zuma. The Zuma faction is said to be aggressive in demanding black presentation in the strategic sectors of the economy such as mining. This has seen for instance a marginal growth of coal supply to Eskom by the black owned entity called Tegeta which is partly owned by the Gupta family. After buying Optimum Coal from the Swiss conglomerate, Glencore, Tegeta was able to provide about 5% of the coal supply of Eskom, the rest is by and large provided by traditional white owned companies. The public spat between the Treasury and Eskom is about this development. Eskom is seen as moving too fast in black empowerment, this has upset established interests. Anti neo-liberal economists have over the years argued against the "privatisation" of certain entities including the South African Reserve Bank, which has itself come into the fray. Recently, ANC deputy general-secretary Jessie Duarte raised concerned about the independence of the Bank and its private ownership which was unable to defend the rand. Kganyago and Naidoo The Bank responded swiftly and harshly against the claims of Duarte. It has been shown that the pro-business senior management of the Bank had been responsible for the policies seen as pro-business and anti-people such as governor Leseja Kganyago and his deputy, Kuben Naidoo. In the latest war over policy direction the old pro-business lobby has asserted itself. The two worked in the policy environment where Manuel and Gordhan were ministers who pushed the pro-business austerity macroeconomic policy such as Gear which has been blamed for "jobless growth" and the initial privatisation including allowing capital flight by allowing the big five companies to list on the London Stock Exchange. The suspension of the credit lines to SOEs by Futuregrowth is likely to precipitate a panic in the economy and may pave the way for a downgrade by the rating agencies. It would seem like the war for policy direction has entered a zone of scorched earth policy where nothing is sacred. The big question now facing South Africa is whether it would be able to withstand the economic sabotage for neo-liberalism or be able to push back the return of aggressive pro-white business policies associated with Manuel and Gordhan. . Andile Mngxitama is the leader of Black First Land First From: <http://tnaepaper.co.za/DRIVE/main%20edition/08092016/epaperpdf/19.pdf> http://tnaepaper.co.za/DRIVE/main%20edition/08092016/epaperpdf/19.pdf __________ Information from ESET NOD32 Antivirus, version of virus signature database 14088 (20160908) __________ The message was checked by ESET NOD32 Antivirus. http://www.eset.com -- -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. 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