Asset Prescription: The ANC is firmly committed to economic insanity
31 May 2020
A leaked ANC discussion document (see here) on post-Covid economic recovery specifically proposes for the first time the amendment of Regulation 28 to prescribe pension fund investments. Having alluded to it often before, this document is the clearest indication yet that the ANC definitely intends to introduce asset prescription in South Africa.
The document, at page 32, proposes to "Amend Regulation 28 of the Pension Fund Act in order to increase the access of the Savings of South Africans to fund long-term infrastructure and capital projects, as a result increase the availability of funds to DFIs and financial intermediaries at a reasonable rate of interest.” This is ANC-speak for forcing pension funds to lend money to SOEs and other development finance institutions (like the Land Bank - which recently defaulted on its own debts, and a future State Bank, which the document also proposes).
The DA will fight this proposal every step of the way, because it is fundamentally destructive to economic confidence, and it undermines the pension savings of millions of hard working South Africans. Every person who saves diligently for retirement, and every asset manager and pension fund who manages those savings, should help to stop this.
Asset prescription is not only destructive, it is also totally unnecessary. If SOEs were well run then there would be no shortage of private sector funding ready and waiting to lend them money and fund infrastructure projects. The ANC cannot run SOEs properly, and will not sell them, so now wants to force citizens to pay by sacrificing pension returns. It is a lie for the ANC to say that asset prescription is necessary, or ‘developmental’, when they refuse to consider every better policy option.