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

 

BoN expects economic growth of 0.3%

4 days ago - 15 April 2019 | Economics

The Bank of Namibia (BoN) expects the economy to grow by 0.3% this year, according to its latest Economic Outlook released today.The Namibian economy was...

Recession butchers jobs

1 week ago - 10 April 2019 | Economics

Jo-Maré Duddy – From 2016 to 2018, Namibia’s total population increased by 3.8%, its population of working age expanded by 3.6%, the economically active population...

On tax-free allowances and inequality

1 week ago - 10 April 2019 | Economics

Sometimes, well-meant interventions have unintended consequences.One case in point are tax-free allowances, such as tax-free housing allowances, tax-free car allowances, tax-free pension fund contributions, etc....

Sub-Saharan economic growth recovery to take longer

1 week ago - 10 April 2019 | Economics

Omar Mohammed - The World Bank has cut its growth forecast for Sub-Saharan Africa this year to 2.8% from an initial 3.3%.The commodity price slump...

Survival in arid eastern Chad depends on struggle for...

1 week ago - 10 April 2019 | Economics

Amaury Hauchard - "I've already earmarked a customer for this drum - I need to get a move on!"Ali Ahmat, 12, flicks his whip to...

No more manna for SOEs

3 weeks ago - 29 March 2019 | Economics

In what has become a yearly occurrence, the government has yet again decided to give the lion's share of the budget for state-owned enterprises to...

One third without jobs

3 weeks ago - 29 March 2019 | Economics

More than 364 000 people in Namibia were unemployed last year, most of them young people between 20 and 24 years old. The latest...

PSEMAS, wage bill, S&Ts under fire

3 weeks ago - 29 March 2019 | Economics

Public Service Employees Medical Aid Scheme (PSEMAS) member contributions will be doubled from N$410 million to N$820 million year, effective April 2019. This was...

Oskema yoPSEMAS, oondjambi oshowo iifuta yomalweendo ya talwa omeho

3 weeks ago - 29 March 2019 | Economics

Iifuta yiilyo yOskema yoPublic Service Employees Medical Aid Scheme (PSEMAS) okwa hololwa tayi ka mbalipalekwa okuza pomiliyona 410 okuya poomiliyona 820, okutameka omwedhi Apilili nuumvo.Shoka...

It's official: 2018 was a recession year

3 weeks ago - 28 March 2019 | Economics

Data released by the Namibia Statistics Agency (NSA) this morning shows the economy grew by -0.1% last year, better than the -0.9% in 2017.The contraction...

Latest News

Chinese embassy condemns Andara killing

1 day - 18 April 2019 | Crime

The Chinese embassy has condemned the killing of a 32-year-old man at Andara in Kavango East yesterday. The man was allegedly shot and killed by...

Thought Leadership

2 days ago - 18 April 2019 | Columns

Ashante MannettiIn this fast-paced world we try to juggle a million things at once. Job, family, friends, eating healthy and we know we still need...

Taking charge

2 days ago - 18 April 2019 | People

Mariselle Stofberg Anthea van Heerden decided to take a leap of faith to start her own company in Windhoek.She is the managing director and...

Chained worker 'joke' backfires

2 days ago - 18 April 2019 | Labour

Nic Kruger, the owner of Kruger Trading Enterprises (KTE) Custom Body Work in Windhoek, yesterday vehemently defended the honour of his foreman who had chained...

Gangster's paradise

2 days ago - 18 April 2019 | Government

President Hage Geingob has revealed that 329 red-flagged financial transactions, involving N$9.2 billion, have been referred by the Financial Intelligence Centre (FIC) for further investigation...

ACC probes Katiti

2 days ago - 18 April 2019 | Crime

Augustinus Katiti's attempts to have the Anti-Corruption Commission investigate his successor at the Namibia Institute of Pathology have backfired. The ACC is now investigating Katiti...

Kabajani blossoms at GIPF

2 days ago - 18 April 2019 | People

Michelline Nawatises Annette Likeleli Kabajani is a holder of a bachelor’s degree from the University of Namibia (Unam). She has also attained several management and...

Baking a name for herself!

2 days ago - 18 April 2019 | People

Ester Kamati At the age of 28, Alma Tangi Nakanduungileh is climbing the entrepreneurial ladder and adding sweetness to her clients’ lives. A qualified...

A passion to unlock potential

2 days ago - 18 April 2019 | People

Ester KamatiJustina Mulokoshi is a chartered accountant (CA) at PwC who has big dreams and is constantly on the lookout for new ways to improve...

Load More