CityPress - - Business -

esperate times re­quire des­per­ate mea­sures, says San­lam In­vest­ments chief ex­ec­u­tive Jo­han van der Merwe, when asked how South Africa will find a way out of its stag­nant econ­omy.

Van der Merwe, who com­mands a busi­ness with R700 bil­lion in as­sets un­der man­age­ment, 10% of the coun­try’s R7 tril­lion pool of pen­sion sav­ings and in­sur­ance in­vest­ments, says he would con­sider ac­cept­ing a regime of pre­scribed as­sets if it could be shown it would make a dif­fer­ence.

In a con­ces­sion gen­er­ally re­garded as a heresy in the in­vest­ment world – where the pur­suit of max­i­mum re­turns for in­vestors is leg­is­lated as para­mount – Van der Merwe says ear­mark­ing be­tween 2% and 5% (R140 bil­lion and R350 bil­lion) of the coun­try’s sav­ings to get oth­er­wise un­af­ford­able na­tional in­fra­struc­ture projects up and run­ning may work.

Forc­ing pen­sion funds to in­vest in state projects is noth­ing new in South Africa. The apartheid gov­ern­ment wrote laws to com­pel pen­sion funds to in­vest up to 50% of their as­sets in gov­ern­ment bonds and other pre­scribed stock such as Is­cor, Sa­sol and home­land de­vel­op­ment cor­po­ra­tions. Low re­turns from these in­vest­ments left some state pen­sion funds, no­tably Transnet, un­der­funded and, in re­cent years, those pen­sion­ers have ex­pe­ri­enced great hard­ship.

Eco­nomic De­vel­op­ment Min­is­ter Ebrahim Pa­tel has said a form of pre­scribed in­vest­ments could pro­vide de­vel­op­ment cap­i­tal. But Trea­sury said it would not sup­port that be­ing im­posed on the pen­sion in­dus­try.

Van der Merwe says he is not of­fer­ing free money to gov­ern­ment at the ex­pense of San­lam’s in­vestors. He is in­di­cat­ing an open­ness to find ways of break­ing up what has be­come an in­vest­ment log­jam.

“There has to be a way of get­ting big busi­ness and gov­ern­ment work­ing to­gether,” he says. “There are tal­ent and skills in the busi­ness sec­tor that can help gov­ern­ment find a way through the mess we are in.”

Van der Merwe talks from a po­si­tion of strength. San­lam In­vest­ments claims 20% com­pound growth an­nu­ally for the past 10 years.

Last year Van der Merwe was re­warded with pay of R62.4 mil­lion, largely made up of long-term in­cen­tive pay­ments and out­per­for­mance bonuses, on top of his ba­sic salary of R4.3 mil­lion.

He de­flects ques­tions about his re­mu­ner­a­tion pack­age by say­ing that 41% of it goes back to the tax­man: “All I ask is that it is used for the ben­e­fit of the coun­try and is not wasted on cor­rup­tion.”

And that gets him back to solv­ing the prob­lems of an econ­omy that has hit the buf­fers and is fail­ing the im­pov­er­ished ma­jor­ity of its cit­i­zens.

“Ed­u­ca­tion across the board is the long-term an­swer. We are not go­ing to go any­where with­out a dra­matic im­prove­ment in the qual­ity of ed­u­ca­tion,” he says.

“But first we must end cor­rup­tion, which is be­com­ing en­demic. And we need lead­ers with strate­gic di­rec­tion.”

Van der Merwe says the in­vest­ment sec­tor has a good un­der­stand­ing of the risks the coun­try faces if con­fi­dence is not re­stored. “There is lit­tle prospect of growth to at­tract in­vestors. The Eskom prob­lem is a mas­sive con­straint, the po­lit­i­cal lead­er­ship shows no sign of find­ing a bet­ter way and we are faced with a wealth gap that is un­sus­tain­able,” he says.

Van der Merwe says he fears that with­out cre­ative in­ter­ven­tion to halt the slide down­wards into stag­na­tion and in­debt­ed­ness “we are get­ting to a tip­ping point”.


Jo­han van der Merwe

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