- Economic Transformation Committee deputy chair Zuka Godolimpi said the ANC would pursue the introduction of the prescribed assets “immediately” after the election.
- Prescribed assets are statutory minimum investment targets for a particular asset class, such as government bonds.
- But Godolimpi said the scope of the prescribed assets goes beyond government bond investments to support ailing state-owned enterprises such as Eskom and Transnet.
- For more financial news, visit: News24 Business Top Page.
South Africa's ruling ANC party will press ahead with plans to reinstate apartheid-era rules that force pension funds to put money into certain government-approved investments, assuming it stays in power in upcoming elections.
“We have to start working on it immediately after the election,” Zuko Godolimpi, vice-chairman of the ANC's Economic Transformation Committee, told Bloomberg in Johannesburg on Wednesday.
The ANC released a manifesto last month pledging to transform the financial sector to ensure adequate finance is available for the country's industrialization and economic development by introducing designated assets.
The rule was created in 1956, when a white minority ruled, to force investment in government bonds, but was repealed decades later. The plan has been criticized by the pension industry, which fears investing in underperforming state-owned companies could threaten its funding.
The ANC is considering the move amid pressure to regain its appeal to voters ahead of the May 29 vote, putting it at risk of losing its national majority for the first time since taking power in 1994. ing.
Goldimpi denied polls showing his party's approval rating was below 50% and said there had been no discussions about forming a coalition.
Still, the need to restore growth and address one of the highest unemployment rates in the world means steps are needed to harness the wealth of the country's financial sector to boost the economy. do.
He said that the scope of the prescribed assets goes beyond investment in government bonds, and also supports struggling state-owned enterprises such as Eskom and Transnet, which are in dire need of funds after years of mismanagement, theft and lack of investment. He said it was meant to be done.
“The talks on prescribed assets are about rebasing pension fund investments in productive assets,” Godolimpi said, adding that there was a presumption that it was all about Eskom and Transnet.
“It's not just about that,” he said, stressing that he would consult with the financial sector. “This is about investing in different types of assets, including private property itself, but that is consistent with the industrial output that we want,” he said.
Godolimpi said such measures would also address the over-concentration of the country's retirement savings in companies listed on the Johannesburg Stock Exchange, and that the allocation should be more diversified into other asset classes. He claimed that.
Goldompi said most of the investments were in “telecommunications, retail and therefore not the most productive sectors of the economy.”
Like many countries, South Africa's pension industry is already heavily regulated in terms of what can be purchased, including rules that limit investments in international assets to 45%.
