The projects your retirement money could help fund in South Africa

 ·8 Mar 2021

The National Treasury has published its draft amendments to Regulation 28 of the Pension Funds Act for public comment, detailing the projects which South African pension funds could soon invest in.

Treasury said that the proposed review of Regulation 28 is informed by calls for increased investment in infrastructure given the current low economic growth climate.

“The current regulation does not define ‘infrastructure’ as a specific category, which is currently spread across a number of asset classes like equity, bonds, loans and private equity.

“Consequently, current data from retirement funds does not record the exact investment in infrastructure.”

The draft change proposes that the overall investment in infrastructure across all asset categories, may not exceed 45% in respect of domestic exposure and an additional limit of 10% in respect of the rest of Africa.

Treasury said that the official deadline for comments on the proposed amendments to Regulation 28 is 29 March.

What is infrastructure? 

The proposed Regulation 28 amendments use the same definition for infrastructure as the Infrastructure Development Act of 2014.

Under this Act, infrastructure includes installations, structures, facilities, systems, services or processes which are strategic integrated projects, or part of the national infrastructure plan.

These are further broken down in the 2014 Act as follows:

  • National and international airports;
  • Communication and information technology installations;
  • Education institutions;
  • Electricity transmission and distribution;
  • Healthcare facilities;
  • Human settlements and related infrastructure and facilities;
  • Economic facilities;
  • Mines;
  • Oil or gas pipelines, refineries or other installations;
  • Ports and harbours;
  • Power stations or installations for harnessing any source of energy;
  • Productive rural and agricultural infrastructure;
  • Public roads;
  • Public transport;
  • Railways;
  • Sewage works and sanitation;
  • Waste infrastructure;
  • Waterworks and water infrastructure.

Recovery plan

A ‘massive rollout of infrastructure throughout the country’ is one of the key interventions identified as part of president Cyril Ramaphosa’s Economic Reconstruction and Recovery Plan.

In his 2021 state of the nation address, the president said that government has now developed an infrastructure investment project pipeline worth R340 billion in network industries such as energy, water, transport and telecommunications.

Some of the infrastructure projects which have been identified by the president include:

  • Lanseria Smart City which will become home to between 350,000 to 500,000 people within the next decade;
  • Phase 2A of the Mokolo and Crocodile River Project, and the uMkhomazi Water Project;
  • Road projects worth R19 billion covering the spine of the South African road network;
  • The construction and rehabilitation of the major N1, N2 and N3 highways;
  • The Student Housing Infrastructure Programme which aims to house 300,000 student beds;
  • SA Connect, a programme to rollout broadband to schools, hospitals, police stations and other government facilities.

While the infrastructure plan has been welcomed by the private sector, businesses have expressed disappointment at government’s failure to properly and speedily execute it, noting the 2021 budget indicated a R70 billion underspend.

Read: Around 23,000 tax residents leave South Africa each year – and government is about to tighten the noose

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