Hon Chairperson, when the ANC at its 54th National Conference, adopted the resolution on investment and allocation of resource, it was reaffirming a long standing view debated in the early 1990s, that financial resource needs to be invested in prescribed assets for developmental purposes. These developmental purposes were defined as investment in public infrastructure, skills development, and job creation.
True to the traditions and character of the ANC, it resolved to investigate this. I think you must underline that hon Hill- Lewis. To investigate this so that the modality of investment in prescribed assets is based on the balance of evidence. Balance of evidence, international practice, particularly in developing countries and the understanding support and trust of
stakeholders, underline that again. Hence, we are saying we are going to take a view that we need to consult, consultation process that is going to take all these particular factors into consideration.
The answer to the question that was raised by Shivambu to say maybe the view is too broad, it does not specify as to what the intention is. The intention is that we seek to grow the economy and address the triple challenges of poverty, unemployment and inequality.
The special role of retirement funds in investments, both in terms of the share of the retirement funds in financial assets especially Johannesburg Stock Exchange, JSE, bonds and the investment of retirement funds have got to be debated.
What we are addressing is that we have a sluggish economic growth and a rate of investment that does not match the needs of the country. This has to be addressed and in doing this the risk profile has to be developed and will be taken into account out of the experience we have.
The good thing we do as the ANC is that we acknowledge that there are challenges, we are not burying our heads in the sand. We acknowledge that there are challenges that the economy is not growing as expected therefore, because we have the responsibility to lead, we are bringing an intervention to say how do we then out of the current situation grow the economy and address the triple challenges of unemployment, poverty and inequality.
The difference between us and the DA is that we have the responsibility to govern whereas the DA has the responsibility to oppose.
Retirement funds have a special role in modern economies. On one hand they provide a central source of financing for both listed companies and governments. On the other hand, workers own a relatively large share of retirement funds, both these factors mean that retirement funds have social responsibility that goes beyond normal fiduciary requirements for investments by investment managers.
The worry by the DA is that why are focusing on the returns to say the returns but not on growing the economy to say how do we grow the economy and how do we create job opportunities? So, we need to balance these as much we are looking at the issue of the returns but let's also look at the issue of growing the economy.
Taken together, the assets of public and private retirement funds were worth R3 trillion in 2017, which is equal to two thirds of the value of the whole economy. Retirement funds now hold 11% of all company shares up from 6% in 1994.The public funds managed by the Public Investment Corporation, PIC, alone account for 8% in JSE capitalisation. Twenty five years ago, the figure was just 1% with a fall due mostly to a change in regulations and the PIC's investment strategy. Now, despite the PIC's move into the JSE, retirement funds owned 30% of all public bonds in 2017 downed from 40% 1994.
Public sector pensions saw their share in the funding of our government and its agencies drop from almost a third to a fifth in the past 25 years. Now, the retirement fund's huge financial
holdings mean that their decisions have a huge impact on the national economy.
Two thirds of the pensions and provident assets are owned by ordinary working people in the poorest of the 90% household, while the richest which is only 10% of the household own the remaining one third. But, for comparison the richest 10% own well over two thirds of all the other financial assets. So, how are we going to address these inequalities if the DA and other opposition parties are standing to say no don't invest in the economy, don't grow the economy, and don't address the inequalities. How are we going to do that?
It means you are comfortable with the status core. You are comfortable with the status core because under apartheid, you benefited from the very same prescribed asset.
Hon Wessels, it is not true to say the apartheid tried. No, they did not try; they did it for 33 years. I think hon Shivambu was explicit on that and for the first time I agree with hon Shivambu in this House. They did it for 33 years. So, you
benefited from the prescribed assets. So, you can't say apartheid government tried. No, they did for 33 years from 1956 to 1989.
Now, for workers, strong, sustained overall growth in the economy and employment is very important. For any pensioner, it is crucial that their children have jobs and they would accept the need for innovative investment to achieve that end. It is not true that pensioners are only worried about the returns to say what returns are; they are also worried about job creation because their children are unemployed. And they are looking at government for the government to provide solutions for job creation and growing the economy. So, it's not true that pensioners are only worried about their returns; they also worried about growing the economy and job creation.
Unlike richer investors with large personal assets, ordinary working class retirees depend on collaboration between their managers to secure sustained economic and social development. Only then can they truly enjoy the fruits of their working lives. We need to move to collaboration to boost investment in
infrastructure and the real economy so as to promote industrialisation, job creation and growth.
Collaboration in ensuring development investment has become particularly urgent in the past few years. The combination of job losses and the decline in the Gross Domestic Product, GDP, over the past two years only underscores the deep seated challenge faced by the South African economy.
This is part of a trend towards slower growth since 2015. We can understand this trend as a result of the conversions of international and domestic economic policy factors.
Internationally the end of the community boom in 2011 saw a sharp fall in the value of our mining export with prices dropping between 25% and 50% for platinum, gold, iron ore and coal. The results were a slow down in both mining and heavy industry in South Africa and across the region. That, in turn had a negative impact on our overall economy and especially manufacturing which depends primarily on the domestic and regional market
In the past, we have seen a slow down in growth in most of our main export market especially China, India and the European Union. Moreover the growing uncertainty around the United State, US, trade and foreign policy seems likely to aggravate international instability in the next few years.
We have to deal with the reality that the rules based regime for international trade has been overturned in favour of economic bullying by the most powerful economy in the world. Now, domestically on top of the global slow down, we have to grabble with the lingering implications of State Capture.
All these factors mean that we have no choice but to find innovative paths to grow and invest. None of us can afford to fall back into complaisance or hope to keep doing business the way we used to. Rather we need to identify new roads to building our economy, diversifying into new activities that can create employment, support new businesses and accelerate growth. That in turn means we have to find financial mechanisms that can mobilise all our national resources to build our economy.
USIHLALO WENDLU (Mnu M L D Ntombela): Lungu elihloniphekile kuyaye kuthiwe ongekho akekho nesisu sakhe kodwa ngoba naku usubuyile ne-Cope ayikho lapha eNdlini, sesizokufaka laphaya endaweni ye-Cope.