At its 2017 national conference the ANC put prescribed assets on the table. The notion was to force financial institutions to invest a share of their savers’ funds in projects handpicked by the government to fund “public infrastructure, skills development and job creation”.
Given the ANC’s dismal track record in all three areas and chronic losses across all state-owned enterprises (SOEs), it is a safe bet that these forced investments would have delivered lower returns than investments made on commercial grounds. Indeed, if it were otherwise there would be no need for prescription. The upshot is that prescribed investments would take money out of the pockets of pensioners and savers, diverting it instead to the ANC’s well-greased patronage networks.
After fierce opposition from civil society, including the Institute of Race Relations, the ANC backed off from the idea, with economic transformation committee chair Enoch Godongwana saying in 2020 that the issue of prescribed assets was not on the table.
However, now higher education minister Blade Nzimande appears to have put it back on the table. On January 6 he said: “Prescribed investment must be pursued must unlock [sic] the trillions of rand accumulated from our economy but held in liquid cash in what is tantamount to an investment strike primarily by the financial sector. It is important to bring finance capital under democratic discipline in the public interest to meet our national development goals.”
This is highly confusing. Has President Cyril Ramaphosa lost control of his cabinet? Are prescribed assets on or off the table? With the savings of millions of South Africans potentially at stake, it really is incumbent upon the president to provide clarity. The present uncertainty is harming the country by eroding public trust in the inviolability of pensions and savings.
John Endres, Chief of Staff, Institute of Race Relations
