The ANC is willing to put on ice plans to introduce legislature which would force the retirement industry to invest in much-needed social infrastructure, should these companies be willing to pull their weight without being forced to.
In terms of the law, government could force pension funds to put sizeable investments in social infrastructure by enacting legislation to this effect.
The idea is contained in the ANC’s election manifesto.
This as the party seeks to channel more resources into the building of new schools, hospitals, dams and roads.
President Cyril Ramaphosa has been crisscrossing the world as part of his mission to raise R1.3 trillion in foreign direct investment over the next five years.
ANC treasurer-general Paul Mashatile said the money from pension funds could complement Ramaphosa’s efforts and similarly boost domestic investment.
“It is okay for the president to run all over the world looking for funds for the country’s infrastructure, but we have in South Africa a retirement industry that is worth more than R4 trillion,” Mashatile told City Press on the sidelines of the state of the nation address (Sona), delivered in Parliament in Cape Town last week.
Last Tuesday, Mashatile attended a dialogue and dinner with leaders of the Third Way Investment Group in Cape Town to provide clarity on what is an otherwise vague reference to plans to reintroduce prescribed assets.
“We will investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development,” reads the ANC’s manifesto.
Mashatile said the retirement industry needed to come to the table to aid government in its efforts.
“The pension fund managers are concerned about the reintroduction of prescribed assets, meaning that government will, through legislation, force them to invest in social infrastructure in particular.
“Their view was that they wanted to do it voluntarily with incentives, where government has clear projects that they can invest in.
“I told them: ‘Do not worry so much about prescription; let us look at transformative investments. You invest in economic infrastructure but make sure that on social infrastructure, there is also a sizeable investment by pension funds. At the moment, we are as low as 5%. We should be at 15%, so we need to jack that up.”
Mashatile said the fund managers raised concerns about the government’s ability to get its house in order with regard to state-owned enterprises (SOEs).
“Some of them said: ‘Your SOEs are not working very well; their balance sheets are weak. If you fix those things, we are willing to invest in alternatives, but do not prescribe. Do not go back to prescription; let us look at what needs to be done.’
“So, we are going to have a much bigger gathering with them where they are all there and we will engage with them, as the ANC, on how to increase investment in socioeconomic development.”
In his Sona, Ramaphosa made no mention of plans to change the mandate of the SA Reserve Bank.
This, despite mention being made in the ANC’s manifesto of tinkering with the bank’s mandate.
The party had resolved that the Reserve Bank be nationalised at its national conference, held at Nasrec in Johannesburg in 2017, where Ramaphosa was elected president.
Senior ANC leaders who form part of the top six have been speaking with forked tongues over the bank’s future.
However, Mashatile emphasised that changing the bank’s mandate was not on the cards.
“The resolution at Nasrec, that the Reserve Bank should be publicly owned, stands. It does not matter whether you say nationalised or publicly owned. So, the president said that in order to implement this resolution, there are many considerations we need to take into account.
“We need to do it responsibly, but the Reserve Bank’s mandate remains – there is no intention to change it.
“We will manage this issue as we go on. At the moment, for us, it is not an issue to worry about.”