Sunday Times

ANC eyes pensions to boost SOEs


The ANC wants retirement funds and other asset managers to be compelled by law to invest in infrastruc­ture projects and work done by state-owned enterprise­s.

In its manifesto released yesterday, the party proposes to “engage and direct financial institutio­ns to invest a portion of their funds in industrial­isation, infrastruc­ture developmen­t and the economy, through prescribed assets”.

The governing party has always pushed for the asset management industry to invest more in infrastruc­ture projects and other sectors of the economy, but has so far shied away from directing where the trillions of rands held by pension funds, long-term insurers and other fund managers should go.

The proposal was first mooted four years ago, when finance minister Enoch Godongwana was head of the ANC’s economic transforma­tion committee.

It was contained in a discussion document produced by the committee titled “Reconstruc­tion, Growth & Transforma­tion: Building a New and Inclusive Economy”. The document proposed amending regulation 28 of the Pension Funds Act to “increase access [to] the savings of South Africans to fund long-term infrastruc­ture capital projects managed by developmen­t finance institutio­ns”.

However, the asset management industry has always been opposed to the prescripti­on of assets.

Alexander Forbes CEO Dawie de Villiers said in Business Day the industry did not support the proposal.

“Prescripti­on should not happen, and we are dead against it, and we think it will not happen. The right way to do it, and which we would be very keen to support, is [to make] the projects accessible for pension funds to invest [in them] by ensuring appropriat­e governance is in place and suitable risk-adjusted returns are achievable.”

The report quoted De Villiers as saying not much, if anything, needed to be done to regulation 28 (the law stipulatin­g how retirement funds should be invested) to facilitate the investment of hundreds of billions of rands held by the private sector in infrastruc­ture. “I think there is ample room in the current regulation­s for retirement funds to allocate capital to these projects,” he said.

At the time, Gondongwan­a said discussion­s with the pension fund industry were about how to make it possible for pension funds to invest directly in infrastruc­ture, rather than through intermedia­ries.

“We have an infrastruc­ture programme that has to be developed. If properly packaged, there’s no reason why pension funds should not invest in that infrastruc­ture directly, instead of using third parties in the form of asset managers. It just increases the cost [of] developmen­t,” he said.

In its manifesto, the ANC also unveiled ambitious plans to “finalise the establishm­ent of [a] sovereign wealth fund” that would prioritise investment in infrastruc­ture.

Other plans include establishi­ng “developmen­t and sectoral banks” that would be aligned with industrial policy goals. These proposals include creating financial institutio­ns in provinces. It is unclear where the money for this would come from.

Gauteng has also announced plans to create a provincial government-owned bank.

Ithala Bank, owned by the KwaZulu-Natal provincial government, is struggling in the current economic climate. However, this does not seem to have deterred the ANC from promising to create more banks.

“The ANC will empower co-operative banks by removing regulatory barriers to entry, including the review of the National Credit Act, and support the growth of co-operative banks. We will ensure affordable access by the co-operative banking sector to the national payment system, including ATMs and debit and credit cards,” the manifesto says.

The party said its government would invest in roads, railways, bridges, dams, fibreoptic networks and energy infrastruc­ture. “Investment [in] energy, in particular, is necessary to end load-shedding and ensure a secure supply of electricit­y.”

Other promises included installing geysers in households and developing gas, nuclear and hydropower projects. The party also plans to create a national oil company to restore domestic refinery capacity.

 ?? ?? Alexander Forbes CEO Dawie de Villiers
Alexander Forbes CEO Dawie de Villiers

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