The ANC is in discussions with the pension funds industry and the treasury regarding the use of pension funds or retirement savings to finance government’s infrastructure projects.
The party’s head of the economic transformation committee, Enoch Godongwana, says the ANC has had talks with the country’s top 20 pension funds, including the Public Investment Corporation. These discussions are on the back of the ANC’s proposal to amend Regulation 28 of the Pension Funds Act.
The amendments would allow development finance institutions to fund long-term infrastructure and capital projects. Currently the Act refers only to investment in immovable property.
Speaking at a virtual media briefing on Friday, Godongwana said the ANC is not proposing that the state implements a policy of prescribed assets but that the party is proposing a “relook” into Regulation 28. “if properly packaged there is no reason why pension funds should not invest in infrastructure directly instead of using third parties in the form of asset managers.”
Godongwana says the proposal will be an incentive for pension fund trustees to “make appropriate decisions” with regard to risk and returns on their investments.
The ANC has also proposed that the development finance institutions invest in “green bonds” because they are more affordable than traditional bonds. These bonds also “offer opportunities to promote long-term economic competitiveness and climate resilience”, the party says.
The proposals are outlined in the ANC document titled Reconstruction, Growth and Transformation: Building a New Inclusive Economy. It outlines the party’s vision for the post-coronavirus economy.
The proposals, Godongwana says, are a framework for the key interventions that the government should implement to assist in stimulating growth and investment and to create jobs during the time of the Covid-19 pandemic and beyond.
The proposal is that the government invest in energy, water and sanitation; roads and bridges; human settlements; healthcare; education; digital infrastructure and public transport.
The ANC also wants to establish an agency to oversee government’s infrastructure programmes. The agency will sit within the office of the presidency.
“To lead this process, South Africa’s presidency should be strengthened to play a decisive role in economic policy coordination and, working in close liaison with the government’s economic cluster, should closely monitor and manage effective policy execution,” Godongwana says.
Other proposals include having the South African Reserve Bank directly funding the same development finance institutions through a R500-billion fund and the creation of more state-owned enterprises in the form of a state bank and a state pharmaceutical company.
The party says the state bank should be used to increase competition in the country’s banking sector and to “enhance access to affordable finance”.
“There should be a complete review of the competitiveness and enabling of access to capital and liquidity by the large banks, noting their dominance of the financial system especially for corporations and flow of funds in the financial system.”