Gov flirts with private funds in bid to boost GDP

Trade and Industry minister Ebrahim Patel.

Government has made a renewed call for private pension funds to lift South Africa’s flagging GDP.

Speaking at a conference hosted by the Council for Retirement Funds for South Africa in Johannesburg, Trade and Industry Minister Ebrahim Patel stressed that retirement funds were an essential part of South Africa’s capital market environment, and the role they played, including that of trustees and principal officers, needed to be better appreciated.

“Aside from underpinning equity and debt markets, they have a role to play in the development of South Africa through investment in real assets.”

Patel added that “government’s investment drive is looking not just to foreign direct investment but also to domestic investment to stimulate economic growth.”

Quoting figures in support of his argument that there is substantial potential in private retirement fund liquidity, Patel said an annual report by the Registrar of Pension Funds reported as far back as 2017 that South Africa had R4.2 trillion in aggregate retirement savings.

About 40% of this amount is made up of the Government Employee Pension Fund.

Because of the cumulative size of these funds, he said, decisions made by the administrators “have a huge impact on the national economy”.

Patel also referred to the African Continental Free Trade Area, the opportunities it could unlock, and called on fund managers to develop a “longer-term perspective on returns”.

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