Mboweni: Use of pension funds for projects ‘disappeared’ from my speech

Finance Minister Tito Mboweni. Image credit: Twitter/National Treasury

Finance Minister Tito Mboweni was apparently about to make an announcement on the use of pension funds to finance infrastructure projects in his supplementary budget speech on Wednesday.

During a press briefing after the speech, Mboweni turned to National Treasury Director-General Dondo Mogajane to inquire about “Regulation 28.”

He was referring to Regulation 28 of the Pension Funds Act, which puts various limits on the investment of funds in specific assets or jurisdictions.

“There’s something that disappeared from the speech. What happened to Regulation 28? You made me memorise it. It’s so unfair,” Mboweni said, adding that it was in his speech on Tuesday night.

‘Prescribed assets’

In a statement on Thursday, Democratic Alliance (DA) MP Geordin Hill-Lewis said this was “the clearest indication yet that Mboweni is warming up to the disastrous idea of prescribed assets.”

He added, “At a time when South Africa needs to lower the risk profile associated with our country, and improve its attractiveness to investors to enable economic growth and job creation, pursuing asset prescription will harm the entire economy.

“Asset prescription is a policy straight out of the apartheid government playbook, used to prop up the failing apartheid state when global markets would no longer extend credit. That the ANC would even consider such a policy now is an admission of the comprehensive failure of their government.”

Hill Lewis said the DA “fight against any attempt to raid the pensions of hardworking South Africans to subsidise the ANC failures.”

Ramaphosa’s comments

Earlier this month, President Cyril Ramaphosa gave the clearest indication yet that the ANC is considering increasing the availability of pension funds to finance infrastructure projects.

“This is a discussion that must ensue. No one is saying, go back to the horrible past, but we are saying, let’s embrace the future. Let’s see what is in the interest of all of us as South Africans as we move forward and trustees having the fiduciary responsibility of governing the monies of their members.

“We live in a country which in the past had prescribed assets, where government prescribed that pension funds [and] life offices must, on a compulsory basis because it was embedded in legislation, invest a high portion of their assets in infrastructure and [other projects].

“It is through this that the apartheid government was able to build enormous infrastructure projects like Eskom and Transnet.”

A leaked ANC discussion document, which is authored by Economic Transformation Committee chairperson Enoch Godongwana and is dated 22 May, also proposes amending Regulation 28 of the Pension Funds Act.

Godongwana explained that this would be done to “increase the access of the savings of South Africans to fund longterm infrastructure and capital projects, [and] as a result increase the availability of funds to development finance institutions (DFIs) and financial intermediaries at a reasonable rate of interest.”

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