Pension funds urged to invest in infrastructure

Eos Capital’s infrastructure fund sized at between N$1-1.5 billion is expected to be launched early 2019, focusing on unlocking Namibian infrastructure projects in public services, energy, water, education and healthcare.

25 October 2018 | Economics

Ongwediva Medipark gives quality healthcare to people in the North and they don’t have to travel down to Windhoek anymore- Nicole Maske, Partner: Add Value, Eos Capital

NDAMA NAKASHOLE

The fact that there are a lot of macro-economic factors that can’t be controlled locally makes it scary to invest, a Southern Africa private equity expert told Windhoekers on Tuesday.

In her presentation titled: “Investing in scary times” during an Eos Capital event, CEO of the industry body and public advocate for private equity and venture capital asset classes in Southern Africa (SAVCA), Tanya van Lill, said despite that, pension funds in Namibia can still find attractive and safe returns during these times. This can be done by investing in private equity and infrastructure funds while also helping to stimulate the economy.

One option for pension funds would be to invest in unlisted infrastructure funds, she said.

According to Van Lill, these funds provide attractive returns over a long-term, typically around 15 years, mostly in the form of inflation-linked income as well as some capital gain over the long term.

“Infrastructure assets provide returns of about 15% per annum, with these returns decreasing or increasing depending on the inflation rate,” she said.

In a nutshell, Van Lill encouraged pension funds to consider their role in kick-starting the growth in the economy through investing in private equity and infrastructure funds while also earning attractive returns and making a positive impact.

During the same event, local private equity manager Eos Capital’s Add Value Partner Nicole Maske highlighted an example of Private Equity-invested Ongwediva Medipark hospital as one positive impact made by decisions to invest in private equity.

She said it is important for pension funds to know that it’s not just about returns but the social benefits for its members.

“Ongwediva Medipark gives quality healthcare to people in the North and they don’t have to travel down to Windhoek for that anymore,” said Maske.

Fund reality

Pension fund assets as a percentage of GDP in Namibia is well above the global average, with pension fund assets close to 90% of annual GDP at N$290 billion. This is more than double the assets held in the banking sector, estimated at about N$120 billion. Pension funds thus an opportunity to make a real difference in the economy through what they choose to invest in. If they invest even half of their N$290 billion within Namibia, in activities that stimulate the economy, it could assist in pulling Namibia out of its recession.

This is presumably the thinking around the new Pension Fund regulations which require pension funds to bring 45% of their assets back into the country by April 2019. However, pension funds are now faced with the challenge of investing 45% of their assets in Namibia where there are limited options to choose from. Many are already over-exposed to government bonds and there are only a handful of Namibia-only listed stocks on the NSX. Thus, pension funds are bringing money back and placing it in banks and money market. This does not provide the most attractive returns for funds and does not provide the benefit for the economy that was intended.

Similar News

 

Red hurricane on trade balance

1 day - 19 June 2019 | Economics

Jo-Maré Duddy – China has claimed the top spot for third consecutive time as Namibia’s export destination in the first three months of 2019.In addition,...

AfCFTA coming into force: What’s next?

1 day - 19 June 2019 | Economics

At an extraordinary African Union meeting in Kigali on 21 March 2018, 44 out of 55 African states signed the African Continental Free Trade Area...

ANC row over Reserve Bank unnerves investors

1 day - 19 June 2019 | Economics

Olivia Kumwenda-Mtambo and Alexander Winning - A row within South Africa's African National Congress (ANC) about the role of the central bank has unnerved investors...

Nam's trade deficit shrinks

6 days ago - 13 June 2019 | Economics

Namibia recorded a trade deficit of N$2.95 billion in the first quarter of 2019, a drop of about N$6.3 billion or nearly 68.3% compared to...

Inflation ebbs in May

6 days ago - 13 June 2019 | Economics

Annual overall inflation in May came in at 4.1%, down from 4.5% the previous month.In May 2018, annual overall inflation was 3.8%.Figures released by the...

BoN keeps repo unchanged

1 week ago - 12 June 2019 | Economics

The Bank of Namibia (BoN) this morning kept its repo rate unchanged at 6.75%.This means the prime interest rates of local commercial banks will remain...

'Be worried'

1 week ago - 10 June 2019 | Economics

Landless People's Movement (LPM) leader Bernadus Swartbooi has accused the government of moving N$10 billion from the Government Institutions Pension Fund (GIPF) to the Bank...

Another recession year expected in Namibia

2 weeks ago - 05 June 2019 | Economics

Namibia is likely to remain in recession in 2019 – the third consecutive year of negative economic growth, the International Monetary Fund (IMF) says.The IMF...

Driving the fiscal borrowing agenda

2 weeks ago - 05 June 2019 | Economics

Jo-Maré Duddy – Government has ensured that it will be able to raise about N$7 billion from the domestic market in 2019/20 by compelling local...

Departures at SOEs could drag out Ramaphosa's reforms

2 weeks ago - 05 June 2019 | Economics

Alexander Winning and Olivia Kumwenda-Mtambo - President Cyril Ramaphosa's mission to fix two of South Africa's most troubled state companies, power firm Eskom and South...

Latest News

Ndeitunga flaunts Kalahari successes

4 hours ago | Crime

Police chief Sebastian Ndeitunga has flaunted the successes of Operation Kalahari Desert, saying 871 suspects have been arrested including for murder, attempted murder, rape, serious...

Oncologist tusk case postponed

4 hours ago | Justice

The matter involving renowned Windhoek oncologist Dr Thomas John Brown van Wyk, who was arrested for the alleged illegal possession of three elephant tusks, has...

Killing dreams

4 hours ago | Opinion

The school sport fraternity has rightfully greeted the news that there will be no government financial assistance when it comes to international participation with a...

Congo general awarded N$12m settlement

4 hours ago | Justice

Congolese general Francois Olenga was awarded a settlement of US$850 000 (N$12 350 500 at yesterday's exchange rate) by the High Court of Namibia on...

Fresh water could turn hepatitis...

4 hours ago | Health

Unless the lack of clean running water and toilets within informal settlements is tackled urgently, the 19-month tide of hepatitis E infections across the country...

Namibia on its way to...

4 hours ago | Fishing

STAFF REPORTER The first public consultative meeting of the inter-ministerial blue economy committee will take place today. The meeting will be take place at the...

Union, MMI cement relationship

4 hours ago | Labour

MMI Holdings Limited (MMI) yesterday formally recognised the Namibian Bank Workers Union (NBWU) through the signing of a recognition agreement. MMI Holdings Namibia interim group...

Schools no place for political...

4 hours ago | Education

The education executive director Sanet Steenkamp has called on the public to refrain from using schools for gatherings, campaigns and fundraising activities for political gain.In...

Kalahari in LPM’s sights

4 hours ago | Police

The Landless Peoples Movement (LPM) has added its voice to the growing clamour for the government to withdraw members of the Namibian Defence Force (NDF)...

Load More