The Group Chief Executive Officer of Absa Group, Kenny Fihla, has urged African countries to rethink how they invest pension funds.
He warned that the current system is holding back the continent’s economic growth.
He explained that existing investment strategies limit the amount of money available for key sectors that could drive development.
Although pension funds must protect savings and meet long-term obligations, he believes the current approach does not deliver the best possible returns.
“Some of the pension fund investment policies actually mitigate against the capital being deployed in the right sectors. Many of these policies restrict where the money can be deployed and secondly make a requirement for a significant portion of these savings to be deployed in investments that are outside of African continent,” he said.
Mr Filha outlined five important areas where pension funds should focus to support Africa’s long-term growth.
On infrastructure, he said, “I think we should be looking at what we can do to unlock productive infrastructure development. That is, not just delivering the infrastructure project but unlocking the economic potential that can be supported by that infrastructure project.”
He highlighted the importance of logistics.
“Think about logistics. If they are efficient, reliable and if the logistics are connected [supply chains] will work exceptionally well.”
He pointed to the mining sector as another key opportunity.
“Think about the mining sector and the processing that is required to supply critical minerals.”
The CEO further noted that African ports could benefit from global disruptions.
“Our own ports should be benefiting from the crisis that is happening in the Middle East.”
Finally, he stressed the need to invest in technology and innovation.
“As everyone is talking about AI, data and so on, we need to support infrastructure that helps us to unlock these opportunities and I think pension fund should make sure that their own policies make it possible for these funds to be deployed to these areas.”
