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Cape Town - The Public Investment Corporation (PIC) could not be used to invest the country out of economic troubles, chief executive Elias Masilela said on Friday.
He acknowledged that the country had to avoid slipping into “an Arab Spring-type environment” in the wake of Marikana and the farm troubles concentrated in the Western Cape, but good work could be done by partnering the public and private sectors to build confidence in the future.
Noting that the PIC, which manages the Government Employees Pension Fund, now had R1.3 trillion worth of assets under management up from about R1 trillion a year ago, Masilela said in the wake of Marikana his mother’s advice became pertinent: “A burden shared is a burden well managed.”
Addressing the Cape Town Press Club at Kelvin Grove, Masilela said: “Now there is a lot of expectation (resting on the PIC)… a lot of South Africans tend to think or believe that because the PIC has all the money… it can invest this country out of trouble.
“The truth is that we cannot. We don’t have the resources, we don’t have all the answers, we don’t have the time to do that. It must be a shared responsibility.”
Noting that much of his work involved “expectations management”, Masilela – who is the former Sanlam head of policy analysis and acting deputy director-general of economic policy at the National Treasury – said: “You can get the best out of a society if you give (it) the right expectations.”
He argued that the current crisis in the mining sector, “in which we have a 30 percent stake in mining resources”, was an “aberration”, indicating that he believed that the sector would settle.
Backing the government’s focus on investment in infrastructure, he said the focus should be on potential bottlenecks “down the line”.
In order to smooth the flow of goods to market, there needed to be investment in roads, telecoms and power.
“You will all recall that we were criticised for investing in SA National Roads Agency Limited,” he said, without focusing on the controversies surrounding toll roads in Gauteng. He referred to the National Development Plan, drawn up by National Planning Commission, which called for “a social compact” to determine a vision for the next 30 years: “You may have the best plan, but if there is opposition to the plan… it is going to be difficult to operate.”
In the context of economic troubles in Europe, he said that “we tend to be the first casualties”. One way of dealing with this was to “stay focused and be long term in the way that we do business through investing and improving capacity in the economy”.
South Africa also needed to be ready when the global economy saw an upturn.
Asked if the investment in infrastructure included proposed nuclear power, Masilela said if an appropriate business plan was put on the PIC’s table, “we will consider it”.
He noted that the PIC had already invested in coal-fired power stations.
“Eskom is questioned the world over about being among the worst emitters in the world,” he said, noting that South Africa was endowed with coal. “We cannot ignore that it exists [in abundance].”
“But we are going to use this resource more efficiently going forward. We are trying to get them to go for [clean] technologies,” Masilela added.
Referring to the roll-out of the national health system and social security reform, including the proposed state pension fund, he said the PIC’s aim was to prove that delivering these products “can be done at a cheaper price” than the private sector asset managers.
Steering clear of the label “prescribed assets”, Masilela was adamant that the PIC needed to make “deserving investments” of a developmental nature, including health, education and infrastructure.
Already R50 billion of assets under management were invested in “developmental funding”. A similar figure was invested in the property market. On top of that R5bn was invested in the green bond, to foster sustainable projects.