South Africa is in deep trouble and the government will need to find new ways to fund its struggling state-owned enterprises, according to the chief economist at the Efficient Group, Dawie Roodt,
One of the ways that the government could try and raise money is through prescribed assets, he said.
“For instance, you could force pension funds to lend money to Eskom. Of course, that is not necessarily a very good investment and it is unlikely you will get a good return.
“I do believe that we will eventually see prescribed assets, but I think it is a very long process and at this stage, I would not advise people to react too hastily,” he said.
“Wait to see what is going to happen before you make decisions like resigning and trying to get your money out of your pension fund.”
In August, President Cyril Ramaphosa said that South Africa should investigate using worker pensions to finance development and infrastructure projects.
“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.
The ANC has also previously floated the idea of using pensions to help fund embattled state-owned enterprises.
Bad idea
The possibility of prescribed assets was again discussed in a parliamentary debate on Tuesday (10 September).
The DA’s Natasha Mazzone said that the proposed scheme would cause incredible damage to the savings of millions of South Africans, and is unlikely to help the country’s state-owned enterprises to recover from debt.
“South Africa has hundreds of SOEs, many of them are either completely dysfunctional, bankrupt, or frankly serve no purpose other than lining the pockets of the connected few,” she said.
The DA’s Geordin Hill-Lewis added that the proposal was equivalent to theft.
“This government is proposing to steal pensions of hardworking South Africans to pay for their mismanagement,” he said.
“Stealing from people’s future pensions is still theft and should be fought by every South African who has diligently saved for their retirement.”
Article by IOL