South Africa’s Public Investment Corporation (PIC) faces a governance crisis as six non-executive directors are reported to have resigned, prompting Finance Minister Enoch Godongwana to consider steps to restore stability.
The Public Investment Corporation (PIC), South Africa’s largest pension fund manager, is in turmoil after six non-executive directors are reported to have resigned, forcing Finance Minister Enoch Godongwana to intervene. The crisis, which followed the placement of PIC chief executive Patrick Dlamini on precautionary suspension, has exposed deep governance fractures. Godongwana reported that he would appoint a new board after a series of board resignations, and called a meeting for Monday, 27 July to consider dissolving the board.
PIC Board Turmoil and Governance Crisis
The PIC’s governance crisis escalated when EWN reported on Friday that Godongwana would appoint a new board after a series of board resignations, following reports that six non-executive directors resigned less than a year after the board was appointed. The departures, including the chairs of the committees overseeing listed investments, unlisted investments and risk, left the board “hollowed out,” according to reports. The Mpati Commission identified systemic governance and structural concerns at the Public Investment Corporation during its inquiry, for which hearings started in January 2019. Godongwana declined to provide Daily Maverick with details of his plans, stating, I will not be commenting further on issues at the PIC in public. I have noted and received communication from the board and will, at an appropriate time, provide further details on the measures we are contemplating as the PIC’s shareholder to ensure a return to stability for the entity,
he said in a written response.
The resignations followed a nine-to-two board vote to suspend Dlamini while allegations in a whistleblower report are investigated.
Financial Market Reactions and Currency Volatility
The rand continued to lose value on Friday, 24 July, dropping close to the 17-per-dollar level for the first time since April, trading at 16.84 against the dollar on Friday, roughly 0.1% down from its previous close, as investors reacted to economic uncertainties. Shaun Murison, a Rand Swiss market analyst, noted, The rand is being hit from all angles at the moment, unfortunately,
citing broader risk-aversion moods stemming from the conflict in the Middle East and new tariffs against South Africa after the U.S. imposed new tariffs on 60 trading partners, including South Africa. The change came after the Reserve Bank’s unexpected decision to hold interest rates, after many experts expected a hike. South Africa’s benchmark 2035 government bond strengthened on Friday, with the yield falling 10.5 basis points to 8.74%. ETM Analytics stated, The future remains uncertain, but the market reaction suggests that policy credibility, real-rate compensation and structural reform must remain mutually reinforcing if rand volatility is to be contained.
Analysts and commentators note that economic growth has been stuck at the paltry 1% it has been stuck at for more than a decade, alongside a 43.7% unemployment rate.
Calls for Transparency and Institutional Stability
COSATU, the Congress of South African Trade Unions, workers and pensioners have been deeply concerned by recent allegations of corruption, state capture, political interference and questionable investments surrounding the Public Investment Corporation (PIC).
China’s Satellite Internet Ambitions in South Africa
The Department of Communications and Digital Tech is actively communicating with potential Starlink rivals from China, including state-owned China Satellite Network Company (CSNC). Minister Solly Malatsi confirmed discussions with CSNC this past week as the minister was visiting the world’s second-largest economy, with meetings exploring satellite broadband solutions designed to address last-mile connectivity challenges in rural and underserved communities. This aligns with our national priority to close the digital divide and ensure equitable access to essential services,
he said.
While CSNC is still not in the position to adequately compete with Starlink in terms of coverage, another firm SpaceSail is already operating 648 low-earth orbit satellites like Starlink and aims to launch as many as 15 000 by 2030, with Brazil already having an agreement in place for SpaceSail’s internet. The PIC’s governance crisis has not directly impacted these discussions, but the regulatory approval process for Starlink involves ICASA currently deciding on whether or not to agree to a President Ramaphosa-approved equity equivalence policy change that will allow Starlink and other operators like the CSNC easier access to the South African market. There is no timeline for this policy change to be approved, and the rejection of the policy change will send Starlink and the South African government back to the drawing board.
Worth a look
