Mar 05, 2010
Patel’s development plan ‘workable’ – economistBack
Africa|Economic|Environment|Investec|Projects|Waste|Africa|South Africa|Annabel Bishop|Waste
© Reuse this
This comes as Patel revealed that he was exploring ways of investing private and public retirement funds in development projects by issuing development bonds.
Patel's strategic plan is aimed at meeting the needs of a developmental economy and as such aims at improving the level of equity, reducing income inequalities, providing decent work and achieving balanced, broad-based industrialisation.
"Indications are that the funding needed for Minister Patel's macro-economic strategic plan will come from the issuance of development bonds to access the wealth held in the public and private retirement funds industry," Bishop said in an opinion piece.
She commented in that if Patel received access to such bonds, it was expected to be issued in the long-end of the maturity spectrum, which would be a "favourable outcome" as it would normalise the yield curve in this period, which has always been "very thin and relatively illiquid".
It would also create pricing for State-owned entities to issue at this maturity.
"It is unlikely that the reintroduction of prescribed assets for retirement funds will occur, unless there is insufficient take up of the development bonds," Bishop noted.
She added that the social responsibility of investing in bonds specifically aimed at fostering an enabling environment at the macro level for the reduction of poverty and inequality through job creation and sustainable economic growth was likely attractive enough on its own, along with the shortage of supply in the long-end of the yield curve, to make absorption of these bonds likely.
However, Bishop warned that South Africa did not have a "bottomless pit of financing."
She said that if the funds were not well and efficiently spent, it would tarnish the moral attraction of the issuance, while the waste from any resulting corruption would be difficult to make up in later years.
In 2003, business, government and labour leaders agreed that pension funds should play a greater role in developing the country, but the proposals were never implemented.
Patel reportedly said that he would need about 5% of private retirement savings and a share of the R700-billion government pension fund's assets
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Economy News
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.