Huge backlash over plan to force investment in government projects

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“Capital follows returns and does not need to be told where to go.”

The ANC’s manifesto pledge to force retirement fund managers to invest in SOEs and state-run infrastructure projects has been met with strong criticism from the financial sector.that reintroducing prescribed assets could result in significant negative outcomes for investors and members of retirement funds.

“Prescription is not synonymous with an open economy that should be encouraging attractive investment opportunities and would in fact deter investment.” Stanlib CEO Derrick Msibi said that the ANC’s policy misunderstands what South Africa’s issues are and could “result in misguided actions.” “Whenever you need to compel an investment by legislation, the implication is that the returns will be lower, or the risk is higher,” said Watkins.These comments follow Standard Bank chief economist Goolam BallimThis is particularly true regarding private sector investment in areas where state-run utilities are failing — such as with energy, water, and logistics.

 

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