Cosatu: Pensions shouldn't be a 'piggy bank' for ANC's failed economic policies | Fin24
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Cosatu: Pensions shouldn't be a 'piggy bank' for ANC's failed economic policies

Mar 07 2020 11:00
Lameez Omarjee

Instead of targeting pension funds as a financing solution for small businesses, the ANC should instead be making an effort to decentralise the banking sector, said Cosatu.

The labour federation on Friday issued a statement in which it slammed remarks by ANC spokesperson Pule Mabe, who said that pension funds could be used to provide financial support to Small Medium and Micro-Enterprises (SMMEs) and start-ups.

Earlier this week, Mabe delivered an address on behalf of ANC Treasurer General Paul Mashatile at the Black Business Summit, where he suggested that pension funds and the savings industry as a whole could support developmental initiatives in the country.

"To address the SMME funding gap, there is an urgent need for us to look at the role of pension funds, or more broadly the savings industry, in facilitating financial inclusion and in particular expanding funding to SMMEs and other developmental projects," Mabe said.

He noted that pension fund assets had grown substantially over the past few decades, with the Government Employees Pension Fund having as much as R1.8 trillion in assets under management.

"We are delighted that increasingly a number of progressive pension funds are already looking at alternative investment vehicles that focus on supporting developmental initiatives such as funding SMMEs as well as social and economic infrastructure," Mabe said.

"We must create an enabling environment to make it easier for pension funds and the savings industry in general to allocate resources in support of development related investments," he added. Mabe also commended Cosatu for proposing pension funds possibly used to provide debt relief to Eskom, as it opened the debate for pension funds supporting national development goals in general.

However, in response, Cosatu took issue with Mabe's comments. "Whilst we agree that SMMEs needs to get special attention, we do not think that pensions are the solution. Pensions remain workers deferred wages and should be invested in ways that benefits workers and should not be used to deal with policy failures," said Cosatu national spokesperson Sizwe Pamla.

"The ANC should do an introspection and then spend more energy contesting the conservative policies of its own government, instead of trying to hide behind workers' pensions," Pamla said.

Apart from reducing red-tape which is holding small businesses back, Pamla said that the ANC should work on the structural problem of the concentrated banking sector. "The focus should be on improving access to affordable finance because mainstream banks and financial institutions do not have small businesses, as their target clientele. As a result, these small businesses are struggling to access the finance they need to grow," said Pamla.

"These big banks are not lending to SMMES and what is needed in South Africa is decentralisation of the financial sector," he added.

While Cosatu believes that pensions can play a role in "changing ownership patterns' in the economy, they should not be relied on by the ANC a "piggy bank" to cover failed economic policies.

Earlier this week Cosatu's Parliamentary coordinator Matthew Parks told Fin24 that the labour federation's proposal to restructure Eskom's debt had become misconstrued as purely targeting pension funds as a balnk cheque to bailout the power utility. Cosatu envisions government setting up a special purpose finance vehicle - a combination of public and private financing – that would reduce Eskom's debt to a more manageable R200 billion. The details of what this special purpose finance vehicle will look like and the conditions for such funding, are still being ironed out.

President Cyril Ramaphosa told journalists at a meeting with the South African National Editors' Forum this week that pension funds could potentially be a source of finance to turnaround Eskom. The president said he understood that people would be concerned about having their pensions go towards a "loss-making entity". However, he assured that Eskom is being rebuilt and that the investment would be into a "revitalised, revamped, non-corrupt" power utility, Fin24 previously reported.



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