PIC’s economic transformation mandate ‘needs revisiting’

Picture: Karen Sandison/African News Agency(ANA)

Picture: Karen Sandison/African News Agency(ANA)

Published Mar 19, 2023


By Trevor Ngwane

Public sector workers were on strike demanding a living wage and better working conditions. It is not easy. The government, their boss, keeps on reminding them, ‘No work, no pay’. If only they had a strike fund to sustain themselves and their families, it would strengthen their strike and they could hold out longer. But where will the money come from? Perhaps some workers, in their desperation, are thinking about the trillions of rands in the Government Employee Pension Fund (GEPF). This is their money, but it is under the control of the Public Investment Corporation (PIC) - the ‘asset manager’.

The time has come to revisit the mandate of the PIC from a working-class perspective. This is arguably the worst time for the working class and the poor in South Africa since the demise of apartheid. High food prices, the rising cost of living, energy insecurity, unemployment, inequality, gender-based violence and many other social ills are making life miserable and unbearable for the masses. What is the PIC doing with workers’ money? Where is it investing the trillions of rands that it controls? How can this money help alleviate the situation for the suffering millions?

The PIC is a state-owned enterprise (SOE). Just like South African Airways, the South African Post Office, Eskom and other SOEs, it too has been embroiled in corruption and shady business practices. Things got so bad that President Cyril Ramaphosa appointed the Mpati Commission to investigate, inter alia, ‘impropriety in the investment decisions at the PIC and associated improper personal gain by parties’ and ‘possible political interference in the operations of the PIC’. The commission’s terms of reference in essence focused on ‘the governance and operational model of the PIC’.

The findings were damning, with the commission identifying a spate of wrongdoing by senior personnel including poor decision-making processes and failure to abide by due processes.

Improprieties and questionable investment decisions were taken involving billions of rands belonging to the PIC’s main client, the GEPF.

Among some of the recommendations of the Mpati Commission to improve governance at the PIC, is the inclusion of three representatives of registered trade unions on the PIC board, two of whom must come from the majority union in the GEPF. This is a welcome reform that can give workers a say over what happens to their money. It is in line with the working-class slogan: “Nothing about us without us.” It might, together with other improvements in checks and controls recommended by the commission, reduce incidents of malfeasance. However, it does raise important questions about possibilities and limits of worker control over investments under capitalism.

The PIC is an asset manager whose primary role is to invest wisely and profitably to the benefit of its clients. At 85%, the GEPF is the biggest asset that it manages in addition to various smaller pension, provident and development funds. The PIC strategy was expanded to increase its focus on areas such as job creation, industrialisation, economic transformation and local investment bias. However, this expanded mandate is not meant to dissuade from the goal of growing the value of the assets it manages. For trade unions, this often raises the question of the convergence and divergence of working-class goals and those of capital.

Peter Drucker noted that a large proportion of global financial assets belong to workers and their pension funds. He called this ‘pension fund socialism’, whereby workers own large quantities of capital thus - in his view - blurring the distinction between socialist and capitalist goals. However, in South Africa, the rise of trade union investment companies, and experiences with the GEPF and the PIC, suggest that there is still a big gap between factual ownership and actual workers control of the money that is managed by pension funds and asset managers. Indeed, the experience has been negative, as can be seen in the case of the corruption in the PIC, and the abuse of trade union investment funds by some union leaders.

Because capital is largely under the control of the financial industry – the asset managers – the outcome can be detrimental to the real economy and working-class interests and labour conditions. In other words, workers have little influence over the companies their capital is invested in. Some critics within the working-class movement argue that this detracts worker leaders from their fundamental goal of socialism. Hypocrisy, they say, abounds as leaders call for nationalisation but are engaged in self-enrichment.

The recommendations of the Mpati Commission are welcome, but they do not address the fundamental contradiction between capital and labour; between production for profit and production to meet human needs. The trade union movement must fight to exert more influence over investment decisions concerning workers money, but they must not lose sight of the only real solution for the working class, namely, the replacement of capitalism with socialism, of bosses power with workers power.

*Trevor Ngwane is the director of the Centre for Sociological Change and Practice, University of Johannesburg.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.