Vavi seeks legislated social rule for funds in South Africa
Thématique :
sud afrique
By Wiseman Khuzwayo, Business Report, November 6, 2008
Johannesburg - The reintroduction of prescribed requirements to force pension funds, which control nearly R2 trillion in workers' assets, to direct a portion of their resources into "socially productive investment" could be one way to address South Africa's low levels of savings and investment, Cosatu general secretary Zwelinzima Vavi said yesterday.
Vast sums of capital were lying idle or channelled into speculative activity, misdirected to capital intensive projects, golf estates and glass buildings, or channelled out of the country while people cried out for real investment in communities and jobs, he said.
Vavi told a quarterly meeting for asset managers organised by Nehawu Securities and 27four Investment Managers that the ANC Alliance Initiative aimed to create 5 million jobs by redirecting investment.
He said a portion of these funds could be channelled into co-operatives and community investment plans, providing infrastructural and financial help to small businesses.
This proposal was first agreed to in June 2003 at a Growth and Development Summit (GDS) hosted by Nedlac and involving stakeholders from the government, business, labour and the community.
That summit agreed to encourage investors - including businesses, pension funds, the life assurance industry and government, labour and community organisations - to work towards putting 5 percent of their investable income in appropriate financial instruments.
In an interview yesterday, Vavi said the implementation of that proposal was not effected immediately because more consultation was needed. He said the proposal could only be implemented through legislation.
Stakeholders at the GDS suggested job creation, housing, basic services and enhanced economic participation as some of the activities that could be supported by the prescribed 5 percent investment.
"It was done under apartheid at 20 percent. We are very moderate," Vavi said.
A strategy paper on socially targeted investment by the National Labour and Economic Development Institute, a research arm of Cosatu, was published in September 2004. It noted that South Africa's investment problem was partially due to apartheid, which deliberately underinvested in the socioeconomic needs of the majority of the population.
Parties to the GDS agreement noted that the 5 percent could be borrowed through the financial sector charter, which has to track progress in social investments. Signatories to the charter include banks, insurance companies, brokerage firms and asset managers.
Each financial institution has a target of directing 0.5 percent of annual after-tax operating profit to corporate social investment between February 9 last year, when the charter was signed, and 2014.
Vavi said the summit had declared that "decisive action is required to transform the patterns of wealth, production and distribution. Macroeconomic policy needs to support economic development and employment creation.
"The priority … was to create decent jobs, and combat poverty and unemployment," he said.
Johannesburg - The reintroduction of prescribed requirements to force pension funds, which control nearly R2 trillion in workers' assets, to direct a portion of their resources into "socially productive investment" could be one way to address South Africa's low levels of savings and investment, Cosatu general secretary Zwelinzima Vavi said yesterday.
Vast sums of capital were lying idle or channelled into speculative activity, misdirected to capital intensive projects, golf estates and glass buildings, or channelled out of the country while people cried out for real investment in communities and jobs, he said.
Vavi told a quarterly meeting for asset managers organised by Nehawu Securities and 27four Investment Managers that the ANC Alliance Initiative aimed to create 5 million jobs by redirecting investment.
He said a portion of these funds could be channelled into co-operatives and community investment plans, providing infrastructural and financial help to small businesses.
This proposal was first agreed to in June 2003 at a Growth and Development Summit (GDS) hosted by Nedlac and involving stakeholders from the government, business, labour and the community.
That summit agreed to encourage investors - including businesses, pension funds, the life assurance industry and government, labour and community organisations - to work towards putting 5 percent of their investable income in appropriate financial instruments.
In an interview yesterday, Vavi said the implementation of that proposal was not effected immediately because more consultation was needed. He said the proposal could only be implemented through legislation.
Stakeholders at the GDS suggested job creation, housing, basic services and enhanced economic participation as some of the activities that could be supported by the prescribed 5 percent investment.
"It was done under apartheid at 20 percent. We are very moderate," Vavi said.
A strategy paper on socially targeted investment by the National Labour and Economic Development Institute, a research arm of Cosatu, was published in September 2004. It noted that South Africa's investment problem was partially due to apartheid, which deliberately underinvested in the socioeconomic needs of the majority of the population.
Parties to the GDS agreement noted that the 5 percent could be borrowed through the financial sector charter, which has to track progress in social investments. Signatories to the charter include banks, insurance companies, brokerage firms and asset managers.
Each financial institution has a target of directing 0.5 percent of annual after-tax operating profit to corporate social investment between February 9 last year, when the charter was signed, and 2014.
Vavi said the summit had declared that "decisive action is required to transform the patterns of wealth, production and distribution. Macroeconomic policy needs to support economic development and employment creation.
"The priority … was to create decent jobs, and combat poverty and unemployment," he said.
