- South Africa’s President, Cyril Ramaphosa, has emphasised the need for strong collaboration between government and business to scale up infrastructure investment and drive South Africa’s economic growth.
- Speaking during a Questions for Oral Reply session in the National Assembly on Tuesday, the President highlighted the importance of structural reforms to address key constraints, such as energy supply and inefficiencies in freight and logistics.
“For South Africa to achieve the levels of economic growth it needs, it is essential that government and business work together to scale up investment in infrastructure. Government has committed to an ambitious infrastructure build programme. Infrastructure spend by government will encourage and enable greater private sector investment in sectors such as electricity generation, electricity distribution, rail rolling-stock, and water distribution,” the President said.
However, he stressed the distinction between public and private financial resources, particularly pension funds held by financial institutions. These funds, he noted, belong to workers and are intended for their retirement, making them private assets rather than State resources.
To facilitate infrastructure investment, the President said that government needs to provide these savers with a reasonable return and ensure that these funds are safeguarded.
In 2022, National Treasury amended Regulation 28 of the Pension Funds Act to allow for longer-term infrastructure investments by retirement funds. The changes introduced a definition of infrastructure and set a 45% upper limit for pension fund investments in infrastructure projects.
Further regulatory adjustments have been made to facilitate economic development, including separating the investment limits for hedge funds and private equity. The allocation for private equity assets has been increased from 10% to 15%, allowing for greater infrastructure investments.
In the Medium-Term Budget Policy Statement of October 2024, the Minister of Finance announced work underway on mechanisms to complement the changes to Regulation 28 through the development of specific investment vehicles to simplify and incentivise institutional investors.
The President said details on these mechanisms will be published in the upcoming Budget, which is expected to be delivered on Wednesday, 12 March 2025.
Author: Bryan Groenendaal
