South Africa’s pension funds are among institutional investors that have agreed to participate in the government’s Infrastructure Fund, President Cyril Ramaphosa revealed on Tuesday.
Ramaphosa was speaking at the Infrastructure South Africa Project Preparation Roundtable and Marketplace in Midrand, Gauteng.
R1 trillion in infrastructure investments
He said the government hopes to unlock R1 trillion in infrastructure investments over the next four years through the Infrastructure Fund.
The President explained, “[The Fund] is a blended financing instrument aimed at de-risking projects to make them attractive for private sector participation.
“It is significant, and most welcome, that the multilateral development banks, pension funds and commercial banks have agreed to participate in the governance structures of the Infrastructure Fund.”
Dr Kgosientsho Ramokgopa, head of the Investment and Infrastructure Office in the Presidency, echoed Ramaphosa’s remarks about the participation of pension funds in infrastructure projects.
Pension funds ‘now at the table’
“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 be able to tap into that big pool of liquidity,” he said.
Presenting his Medium Term Budget Policy Statement last week, Finance Minister Tito Mboweni also said the government will amend Regulation 28 of the Pension Fund Act.
This will “make it easier for retirement funds to increase investment in infrastructure – should their board of trustees opt to do so,” Mboweni said.
Ramaphosa has often stated that infrastructure development will underpin South Africa’s economic reconstruction and development plan.
The government held the inaugural Sustainable Infrastructure Development Symposium (SIDS) in June.
Together with the private sector, it identified 276 projects with a total investment value of over R2.7 trillion. It has since gazetted 50 of these projects valued at R340 billion.
They fall into various categories such as water and sanitation, energy, transport, digital infrastructure, agriculture and agro-processing, and human settlements.