South Africa should investigate using worker pensions to fund finance development and infrastructure projects, president Cyril Ramaphosa said on Thursday.
Speaking in a parliamentary Q&A session on Thursday (22 August) Ramaphosa said that the proposal had the backing of the Congress of South Trade Unions(Cosatu), Reuters reported.
“We need to discuss this matter (prescribed assets) and we need to discuss it with a view to actually saying what is it we can do to utilise the various resources in our country to generate growth in a purposeful manner,” Ramaphosa said.
“We are facing a situation where our developmental needs are enormous, and in a number of other places pension funding is utilised for developmental purposes, for infrastructure and quite often those pension funds make good returns out of infrastructure developments.”
In an interview with the Sunday Times earlier this week, a top ANC official said the party is looking at the possibility of using private and public pension funds to rescue the country’s struggling state-owned enterprises.
Enoch Godongwana, head of the party’s economic transformation subcommittee, said that the asset management industry currently has R6 trillion under management which should be borrowed by government.
Godongwana said using this approach to gather funds is better than going the International Monetary Fund (IMF) for a bailout.
“Why would you go to the IMF and the World Bank and go and raise money when we have sufficient savings in the economy which you can borrow, probably far cheaper, and probably with little exchange rate risk?”
Godongwana added that while the ANC is also currently investigating the use of prescribed assets, this is separate from raising money through pension funds.
“Borrowing from domestic markets is not prescribed assets, that is a separate investigation,” he said.
In its election manifesto published in January 2019, the ANC announced that it planned to investigate the introduction of prescribed assets on financial institutions’ funds to ‘unlock resources for investments in social and economic development’.
Article by Business Tech