{"id":1769,"date":"2020-09-07T15:46:51","date_gmt":"2020-09-07T13:46:51","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=431906"},"modified":"2020-09-07T15:46:51","modified_gmt":"2020-09-07T13:46:51","slug":"anc-on-prescribed-assets-in-south-africa","status":"publish","type":"post","link":"https:\/\/interwebdev.co.za\/index.php\/2020\/09\/07\/anc-on-prescribed-assets-in-south-africa\/","title":{"rendered":"ANC on prescribed assets in South Africa"},"content":{"rendered":"
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The ANC\u2019s head of Economic Transformation, Enoch Godongwana, says that the party is moving away from talk of \u2018prescribed assets\u2019 as economic policy, but still wants to find ways to \u2018unlock\u2019 South Africa\u2019s pensions to assist with the country\u2019s infrastructure goals.<\/p>\n

Godongwana was speaking to Insurance company Alexander Forbes in an interview on a range of economic topics, including the party\u2019s plan for pensions and prescribed assets in South Africa.<\/p>\n

Buzz around prescribed assets came about following the ANC\u2019s 2017 policy conference \u2013 and subsequently its election manifesto in 2019 \u2013 where the party listed the introduction of \u2018prescribed assets for pension funds to mobilise funds from financial institutions for social infrastructure\u2019.<\/p>\n

The announcement incited concerns from investors and members of retirement funds because of the possible implications it could have on investment portfolios and investment outcomes in the country.<\/p>\n

Godongwana explained that the policy of prescribed assets came as a result of the challenges in South Africa, which have resulted in sub-optimal economic growth.<\/p>\n

\u201cUnemployment and the country\u2019s recent credit rating downgrade to junk status are just some of the issues that have created this economic environment,\u201d he said. \u201cWe have learnt that there are two main problems that have led to this precarious economic and social environment that we find ourselves in.\u201d<\/p>\n

Godongwana said that there is a high level of underdevelopment and poverty in the country that needs attention, and this is where infrastructure plays a critical role.<\/p>\n

The central point of contention is how this infrastructure will be funded \u2013 and if prescribed assets would be introduced to force the private sector into participating in capital provision.<\/p>\n

The possibility of prescribed assets was referred to as something \u2018to be investigated\u2019 and it is not something that could be instated without substantial consultation and a robust review process by the government.<\/p>\n

Prescribed assets for infrastructure?<\/strong><\/p>\n

A common discourse that has been used to justify prescribed assets is that investment capital is not being made available for infrastructure projects, and it seems that there is a possible \u2018investment strike\u2019, Alexander Forbes said.<\/p>\n

Godongwana further shared the view that Regulation 28 of the Pensions Fund Act may be too restrictive to facilitate infrastructure investment.<\/p>\n

The regulation currently limits<\/a> <\/strong>the extent to which retirement funds can invest in particular assets or in particular asset classes. The main purpose is to protect the members\u2019 retirement provision from the effects of poorly diversified investment portfolios.<\/p>\n

Alexander Forbes said that if there is a conducive environment within the regulatory framework \u2013 such as Regulation 28 \u2013 institutions such as pension funds would invest on a voluntary basis, and prescribed assets would not be necessary to force investment in infrastructure.<\/p>\n

However, it noted that deregulation could also assist in encouraging direct investments related to big infrastructure projects.<\/p>\n

This is line with previous comments made by Godongwana. In a webinar<\/a> <\/strong>on 17 August, he said that the party is moving away from the use of \u2018prescribed assets\u2019, and is instead focusing on changes to regulation 28 of the Pension Funds Act.<\/p>\n

\u201cWe are moving to an environment where there is no enforced prescription, but you create an environment where trustees can invest in infrastructure profits as long as these projects are profitable,\u201d Godongwana said on the party\u2019s Progressive Business Forum.<\/p>\n

\u201cI want to dismiss and debunk the claim that we want to utilise the pension funds to bail out collapsing state-owned enterprises. The latest theory is that we want to (use the pensions) to fund the state bank.\u201d<\/p>\n

Godongwana said that these were \u2018mischievous\u2019 claims, made with the intention of discrediting the ANC\u2019s argument. \u201cThat\u2019s not where we are at the moment,\u201d he said.<\/p>\n

Alexander Forbes said that pension funds can substantially invest into infrastructure \u2013 listed and unlisted \u2013 across assets classes such as equity and property. However, the issue may not lie where officials think it is.<\/p>\n

\u201cThe challenge is not the regulatory limitations in Regulation 28, but rather the nature of most retirement funds in South Africa that are defined contributions in nature, and therefore are restricted in terms of their profile from investing substantially into non-liquid assets,\u201d it said.<\/p>\n

The firm said that a lot of attention must be paid to creating liquid opportunities for pension funds to invest into infrastructure and the industry was encouraged to be creative in driving these initiatives as this would lessen any risk of prescription.<\/p>\n

\n

Read: What to expect from South Africa\u2019s second-quarter GDP data<\/a><\/strong><\/p>\n

Source: BusinessTech<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The ANC\u2019s head of Economic Transformation, Enoch Godongwana, says that the party is moving away from talk of \u2018prescribed assets\u2019 as economic policy, but still wants to find ways to \u2018unlock\u2019 South Africa\u2019s pensions to assist with the country\u2019s infrastructure goals. Godongwana was speaking to Insurance company Alexander Forbes in an interview on a range […]<\/p>\n","protected":false},"author":2,"featured_media":1770,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[77],"tags":[52,53,54,55,56,8,57,59,72,60,61,62,63,64,65,66],"class_list":["post-1769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-co-za","tag-com","tag-affordable","tag-cheap","tag-cpanel","tag-development","tag-domain","tag-hosting","tag-interweb","tag-joomla","tag-registration","tag-reseller","tag-shared","tag-south-africa","tag-website","tag-wordpress"],"acf":[],"_links":{"self":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts\/1769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/comments?post=1769"}],"version-history":[{"count":0,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/posts\/1769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/pages\/1770"}],"wp:attachment":[{"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/media?parent=1769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/categories?post=1769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/interwebdev.co.za\/index.php\/wp-json\/wp\/v2\/tags?post=1769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}