PENSION FUNDS & ASSET MANAGERS MUST ALLOCATE MORE INVESTMENTS TO THE DOMESTIC ECONOMY

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The Financial Services Regulatory Authority (FSRA) CEO says there are opportunities for investment in the country despite the obviously limited returns compared to offshore markets. The CEO says there are a number of economic sectors in the country that can bring good returns such as the energy sector. Old Mutual Eswatini, CEO Muzi Bell concurs with the FSRA CEO and says as a company they are willing to support local investments, but cautions that the industry needs to take a long-term approach when implementing such a move.

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Photo Credit: www.insidebiz.co.sz

By Ntokozo Nkambule

The Financial Services Regulatory Authority Chief Executive Officer (CEO), Ncamiso Ntshalintshali has once again reiterated the importance of increased domestic asset allocation by asset managers and pension and retirement funds.

The FSRA CEO revealed that as it stands legislation states that pension funds are to invest a majority of their investments in listed securities, compared to unlisted entities. “The challenge with such legislation is that our local stock exchange does not have equities that can provide good returns for pension funds and asset managers. We did, however, increase the local domestic allocation to 30%, but the question still remains on whether this has yielded results. There are initiatives to push this to 50% as legislation states” he notes.

Ntshalintshali who was speaking during Old Mutual Eswatini’s Thought Leadership Forum said they acknowledge that the returns from the local market can never outweigh the offshore market returns, but the country must also start being deliberate in growing the local real economy through increased domestic asset allocation. “We must be intentional about building the local economy. There are a number of opportunities in the country that can bring good returns such as the energy sector. This, however, requires a long-term approach” he observed.

Old Mutual Eswatini Chief Executive Officer, Muzi Bell, in his address noted that as asset managers they certainly want to grow and invest in the local economy, but this must be approached with caution. “We cannot just jump the gun, we have to approach this carefully. As Trustees we must be practical and flexible because the truth is, it is not easy to create local assets. Unless we take shortcuts and invest in assets that will not really benefit the overall economy. We need to take a long-term view of this. But, yes, as Old Mutual Eswatini we are in full support of allocating more in the domestic economy” he concluded.

According to the FSRA Quarterly Statistical Report for December 2021, the capital markets sector allocates assets, domestically, in the Common Monetary Area (CMA), and offshore.

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