ON THE VEXED ISSUE OF ‘PRESCRIBED ASSETS’:

Image result for prescribed assets

In the absence of a clear policy statement, speculation is rife about the likelihood of government introducing ‘prescribed assets’ as one measure to rescue struggling state-owned companies and boost economic growth. Vague comments on the subject from President Cyril Ramaphosa and ANC national executive committee member Enoch Godongwana have been quoted endlessly in the mainstream media. However, apart from an undertaking in the ruling party’s 2019 election manifesto to ‘investigate the introduction’ of prescribed assets on the funds of financial institutions – with the aim of ‘unlock(ing) resources for investments in social and economic development’ – only one Cabinet member has made an official comment on the matter.

In June – addressing pension fund trustees at a function in Johannesburg – Trade & Industry Minister Ebrahim Patel urged them to play their role in stimulating economic growth by investing in ‘real assets’. This was noting that government ‘is looking not just to foreign direct investment’ to stimulate the economy but also – ‘and very strongly’ – to domestic investment. The Minister believes fund trustees ‘have a responsibility … to help lift the long-term rate of growth of the South African economy as a key means of realising the pension promise’.

‘A sluggish economy impacts directly on the performance of your overall portfolio,’ Patel is quoted as having said in a Department of Trade & Industry media statement at the time. Against that backdrop, he invited the Council for Retirement Funds to ‘engage with government to learn more about ‘the new administration’s vision’ for promoting sustainable development, along with the interventions being considered. In the Minister’s view, the situation in which SA now finds itself calls for for ‘a longer-term perspective on returns’.

An article along these lines appeared in Legalbrief Today on 12 June, under Policy Watch