PENSION funds can channel existing funds towards alternative spaces earmarked for foreign currency generation to improve African economies owing to a lack of deep capital markets, a consulting actuary has said.
This comes as geo-political tensions, volatile exchange rates, debt and an inflationary environment continue to negatively impact traditional investment spaces for local pension funds.
Speaking at the just-ended International Organisation of Pension Supervisors/Organisation for Economic Co-operation and Development Global Forum held in Victoria Falls, Risk and Investment Management Consulting Actuaries director Gandy Gandidzanwa said Africa’s real problems were foreign currency-related.
Gandidzanwa called on pension funds to explore alternative investments, namely, financial assets which do not fall into one of the more conventional investment categories.
“The pension industry is strategic in economic turn-around for Africa. It just needs the right leadership and an enabling regulatory environment. There is a lack of deep capital markets across Africa,” he said.
“One would argue that it’s quite a blessing in the sense that in this industry there is quite a huge opportunity to make huge changes in the fortunes of Africa by channelling assets that sit under our jurisdiction towards changing the fortunes of the economies that we operate under.”
Gandidzanwa said at the core of African problem were issues around foreign exchange and foreign currency.
“And one would argue that if the pension fund industry had to allocate more of its assets into the alternative space earmarked for generation of foreign currency, the industry would have played a very important role in addressing some of the challenges that Africa has.
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“So, industry has got quite an important role to play in turning around the economic fortunes of Africa,” he said.
Gandidzanwa further pointed out that the other issue is about capital markets, especially on whether one knew their traditional listed equities and bonds. This is because such securities remain the dominant traditional asset classes globally.
“There is a school of thought that argues that maybe those traditional assets are not going to deliver the same kind of performance. That then brings forth the question, if we are not going to be investing in traditional assist classes, where are we going to be investing?” he queried.
“And the answer is we obviously all agree in alternatives. If we could channel the assets that we have under our management, we could really make some meaningful contributions to the fortunes of our economies.”
According to the Securities Exchange Commission of Zimbabwe (SecZim), two new collective investments schemes (CIS) were licensed in the second quarter, bringing the total number of licensed CIS to 81, up from 79 in March.
CIS is a growing alternative investment choice for institutional investors locally.
“In other licensing categories, there was one new securities investment management company, one new trustee services company and one new securities investment advisory firm that were licensed during the quarter,” SecZim said, in its latest quarterly update.
“Two securities investment Advisory companies voluntarily surrendered their licences. A summary of the total number of licensed and registered securities market intermediaries as at June 30, 2023.”
