Raising capital gets the boardroom’s attention. Administering the debt afterwards is where growing companies get caught out, and the move to ZARONIA is about to make that much harder to ignore.
South African businesses dedicate enormous amounts of time and executive attention to raising capital. Far less attention is paid to what happens after the money arrives. For many growing mid-market companies, access to funding is no longer the hard part. Managing an increasingly complex debt portfolio is, especially when the operating processes behind it were designed for a far simpler business.
This is the mid-market debt trap – a company develops the funding structure of a large corporate long before it develops the operational capability needed to manage it effectively.
Complexity doesn’t grow in a straight line
Debt complexity is rarely linear. The first facility creates some administrative work. The fifth introduces operational risk.
Consider a typical mid-sized corporate with a senior term loan, a revolving credit facility and an asset-backed or mezzanine line. On paper, it is a conservative and fairly standard funding structure. In practice, however, these facilities can generate 15 to 20 reporting deadlines every year.
Each lender requires compliance certificates, management accounts, annual financial statements and budget submissions. Delivery timelines differ. Covenant definitions differ. EBITDA calculations differ. What appears straightforward from a balance-sheet perspective can quickly become complicated from an operational one. And that is before considering interest resets, negative pledges, disposal restrictions, distribution lock-ups and the dozens of other obligations embedded within lending agreements.
Large corporates employ dedicated treasury and middle-office teams to manage this complexity. Mid-market businesses typically do not. In many cases, responsibility for hundreds of millions, and sometimes billions, of rand in debt rests with a small finance team supported by spreadsheets, calendar reminders and institutional memory. The people are rarely the problem – it is the operating model.
The cost of small failures
Treasury failures rarely arrive as a dramatic default. More often, they are small operational slips that accumulate over time.
A compliance certificate is submitted late. A covenant threshold is not monitored closely enough. An interest calculation requires manual intervention. A lender query triggers hours of spreadsheet reconciliation and email searches. Individually, these issues seem minor. Collectively, they create friction that consumes management attention and introduces avoidable operational risk.
The administrative burden is only part of the cost. The bigger part is opportunity cost. Highly skilled finance professionals spend their time chasing information rather than analysing it. Instead of focusing on liquidity management, capital structure optimisation and funding strategy, they become administrators of disconnected processes and fragmented data.
Why ZARONIA raises the stakes
With JIBAR’s final publication due on 31 December 2026, the transition to ZARONIA is bringing these weaknesses into focus.
Under JIBAR, a three-month interest period relies on a single rate known at the start. ZARONIA is an overnight rate, so interest is compounded daily across the period and the final amount is only known at the end. The new benchmark is not inherently more difficult, but it does expose operational processes that were never designed for this level of precision, transparency and auditability.
The question is no longer whether a spreadsheet can produce an interest figure. The question is whether that figure can be independently verified. Which rate was used? How was it sourced? How were non-business days treated? Who approved the calculation? Can the lender reproduce the same result down to the cent?
The root problem is the absence of a controlled, verifiable operating framework. The spreadsheet is simply where that shows up.
Debt is no longer just a funding decision
Historically, debt was treated as a transaction. Terms were negotiated, documents were executed and funds were drawn down. Today, debt has become an ongoing operational discipline. Data must be centralised, calculations must be repeatable, approval workflows must be controlled. Audit trails must exist without requiring manual reconstruction months later. Administering debt well has become as important as raising it.
This does not mean every mid-market business needs the infrastructure of a commercial bank. It does mean recognising that complexity has a cost, and that cost increases as funding structures become more sophisticated.
It doesn’t require a dedicated treasury department either. We built Intengo Concierge for exactly this: it brings the servicing layer – interest calculations, covenant tracking, lender reporting and the audit trail behind them – into a single, auditable system of record. A small finance team gets the rigour of a much larger one, without changing who it borrows from.
Once operational friction reaches a certain point, businesses begin avoiding otherwise attractive sources of capital. They become hesitant to onboard new lenders, explore alternative credit providers or consider more sophisticated funding structures because the administrative burden feels too heavy. When that happens, operational limitations begin constraining strategic growth, and that is the real risk.
For many South African corporates, the most important funding question is no longer: Can we raise the capital? It is: Can our operating model support it once it arrives?
By Ian Norden, CEO of Intengo Market
Ian Norden is CEO of Intengo Market, an independent, technology-driven fixed income ecosystem. Its Intengo Concierge platform helps South African corporates service and administer debt instruments through their lifecycle.
