Government in talks with South Africa’s pension funds to access ‘big pool of liquidity’ for investment

After six months of talking with the private sector and banking institutions, government is now in talks with pension fund managers around possible infrastructure investment in the country, says Dr Kgosientsho Ramokgopa, head of the Investment and Infrastructure Office in the Presidency.

Speaking at the launch of the president’s infrastructure project preparation roundtable on Tuesday (3 November), Ramokgopa said that the country’s pension funds are sitting on a ‘big pool of liquidity’ and are now beginning to explore investment in infrastructure as an additional asset class.

“Previously when we had conversations of this nature, the pension funds were not at the table. Now they are at the table, and are part of the exercise of co-creation, and we think in doing we will bel able to tap into that big pool of liquidity.”

Ramokgopa said that previous infrastructure funding had been taken directly from the government purse, but that the impact of Covid-19 had led to a severely diminished fiscus.

“Essentially we need to look at new sources of funding. But for you to be able to get projects funded outside of government’s balance sheet, they need to be sound projects.”

These ‘sound’ projects are a key part of president Cyril Ramaphosa’s recovery plan for South Africa, with infrastructure and development identified as key to the country’s turnaround.

“The damage caused by the pandemic to an already weak economy, to employment, to livelihoods, to public finances and to state-owned companies has been colossal,” Ramaphosa told parliament in a presentation in October.

“We need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change, placing the economy on ‘a new path to growth’,” he said.

These projects will also be key to creating employment opportunities in the country, Ramaphosa said, with government planning to create as many as 800,00 new jobs.

The president said that infrastructure development has immense potential to stimulate growth in the country and to create sustained employment – both directly and indirectly.

He said that as of the end of June 2020, the country had 276 ‘catalyst projects’ which would contribute over R340 billion in investment.

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