Govt chasing more pension millions

Forcing pension funds to invest more money in unlisted entities might help in the country’s unemployment battle, government believes.

31 January 2020 | Economics

… institutional investors, such as pension funds, should be encouraged to contribute to this national priority. – Kenneth Matomola, CEO: Namfisa

Jo-Maré Duddy – Government is looking for millions more in pension fund money to be poured into unlisted investments to boost economic growth and job creation in Namibia.

The chief executive officer of the Namibia Financial Institutions Supervisory Authority (Namfisa), Kenneth Matomola, yesterday said the watchdog is working on a proposal for government in this regard.

Currently regulation 13 of the Pension Funds Act stipulates that all pension funds in the country must invest a minimum of 1.75% and a maximum of 3.5% of the market value of its total assets in unlisted investments.

Matomola wouldn’t comment on speculation that government wants the ceiling lifted to between 5% and 7%. However, Namfisa received no instruction from government regarding the “floor” or minimum that it wants to be invested in unlisted investments in future, he said.

According to Matomola, Namfisa is putting the “final touches” on its proposal and will present government with its proposal “very soon”. He wouldn’t speculate on when the new requirements would be implemented.

Big bucks

At the end of June 2019, a total of N$1.64 billion of Namibians’ pension money was tied up in unlisted investments, Matomola said.

Most of this – nearly N$394 million or 24% - was invested in manufacturing ventures. Unlisted investments in renewable energy totalled about N$328 million or 20% of the N$1.64 billion.

All the other unlisted investments received less than 10% each of the total.

Commenting on the returns delivered by these unlisted investments, Matomola said each asset class has its own risks.

“The question is whether the pension fund achieved its targets. Yes, investors are getting a meaningful return,” he said.

‘Critical lessons’

Matomola said Namibia has learnt “critical lessons” with its various national development plans. These include that the country is plagued by inadequate investments and that positive growth rates do not translate into adequate employment creation opportunities.

Since the First National Development Plan (NDP1), actual growth in employment has mainly been below targets, he said. Namibia currently has its Fifth National Development Plan (NDP5), spanning from 2017/18 to 2021/22.

By the end of NDP5, Namibia’s unemployment rate should be 24.2%. The latest labour force survey by the Namibia Statistics Agency (NSA) showed unemployment in the country in 2018 was 33.4%.

“High unemployment remains a national concern, and the creation of employment opportunities is a national priority,” Matomola said.

“Hence, it has now become imperative to foster the stimulation of economic growth, thus institutional investors, such as pension funds, should be encouraged to contribute to this national priority,” he said.

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