Leaders’ Roundtable on Mobilising Pension Fund and Sovereign Wealth Fund Assets for Infrastructure Projects in Africa
In terms of the issues that have been raised for us to address as pension funds, I‘d like to say a little bit about the Government Employees Pension Fund. It’s the largest fund in South Africa and on the continent as well as being one of the top ten with approximately $110 billion dollars under management.
In our initial phase we invested only in South Africa and in 2010 there was a decision to also allocate 5% of our investments outside of South Africa in various types of investments. Within that universe infrastructure looms very large, particularly because this is an essential aspect for enhancing development on the continent. So our strategy is guided by two policies; broadly, a policy of responsible investment and then we’ve also got a development investment policy which basically says, as a long-term investor we are ready to invest in projects that offer us a good return in addition to having an impact from an economic development, social and environmental point of view.
But what we find is that the amount of money that has been allocated is actually moving very slowly and the challenges that are being presented – many of them were discussed previously but for us as a pension fund – those challenges mean i.e. the challenge of not finding bankable of projects, the risks that are associated with the not having a proper regulatory framework, institutional capacity, human capital capacity and so forth. What we have learned is that it means that we need to find good partners first of all on the ground, with whom we can co-invest and secondly that we also need to find partners that can address those challenges that have been highlighted.
So in some cases the funds that through which we have invested, have worked very closely with governments to build up the regulatory framework and create an environment that is necessary for those investments to occur but that means that those investments then take quite long. So what we look forward to is some kind of framework that allows us to make that the kind of impact you can as a long-term investor, by partnering with people that can take up the various risks that come with investing infrastructure on the continent at the moment.
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