The suspense will be over soon for pension managers who have been waiting since December last year to hear if the National Treasury will increase the limits on foreign investments and allow them to invest some of their assets in Africa as well.
At present, fund managers can take up to 15 percent of their assets offshore, but only institutional investors are allowed to invest assets in Africa on top of their general offshore allowance.
The Treasury announced changes to investment limits for institutional investors in December last year, but the proposed revision of these limits for pension funds was released for public comment and has since not been finalised.
As a result, the new limits for institutional investors have not come into effect either. It is expected that the Treasury intends to put these into effect only after the revised Regulation 28 has been finalised and gazetted.
Peter Blohm of the Association for Savings and Investment SA said it might be Treasury’s intention to gazette the revised regulation at the time of the 2011/12 Budget.
Asisa which had been actively engaged on the amendment process Regulation 28 said they were confident that the final outcome will benefit the consumers.
“The amendments are the product of a very open and consultative process followed by National Treasury and the Financial Services Board (FSB),” said Asisa’s chief executive Leon Campher.
The organisation submitted comments on both rounds of public comment on the draft amendment to Regulation 28 and the latest was on the 28th of January this year.
Treasury spokesman Jabulani Sikhakhane said yesterday that the decision on these limits would be available anytime between today and next week.
“We cannot say what is in the Budget but it can be as soon as tomorrow (Wednesday),” Sikhakhane said.
Jurgen Boyd, the deputy executive officer for pensions at the Financial Services Board, said the regulator had already exempted about 2 000 pension funds from the current limit of 15 percent of assets and increased their foreign limits to 25 percent plus 5 percent for investment in Africa.
“The revised Regulation 28, which it is envisaged will be implemented shortly, will obviate the need for the registrar to use this exemption methodology when the SA Reserve Bank adjusts these limits,” he said.
Fund managing institutions said they were ready to jump at the opportunity and take advantage of the new limits.
Allan Gray’s Nick Ndiritu said the firm was already eyeing a subset of the 92 largest and most liquid African firms as targets to expand in time.
“Although we recognise some of the factors driving the current interest are not sustainable, on balance we believe Africa presents an attractive set of opportunities for long-term investors,” he said.
There is already a sharp rise in private capital seeking a home in Africa. - Londiwe Buthelezi