Reserve Bank of Malawi set for pension funds ‘investment in infrastructure’ symposium
The Reserve Bank of Malawi (RBM) has announced it will on Tuesday hold a symposium in the commercial capital Blantyre whose aim is to discuss pension funds investment in infrastructural development.
In a statement signed by RBM governor, Dalitso Kabambe, the symposium will be held at Sunbird Mount Soche Hotel under the theme ‘Investing Our Future In Infrastructure.’
According to the RBM boss, the Pension Act of 2011 was “enacted with the primary objective of promoting financial security in retirement by mandating all employers to put their employees on a pension scheme and remit the requisite pension contributions to a pension fund.”
He said the secondary objective was to promote accumulation of national savings that would support national development through various investments.
Said Kabambe: “Significant strides have been made towards ensuring that all employees are on pension and accumulating retirement savings.”
He said noting the slow progress, the Registrar of Financial Institutions has organised a half-day symposium to discuss the opportunities and challenges in Malawi to redirecting pension funds towards infrastructure investments to support national development.
“The symposium will provide a platform to deliberate the role pension funds can play in financing infrastructure development while at the same time attain the much needed diversification and growth of retirement savings, as well as protection of pension members’ interest.
“Participants to the symposium will include pension fund trustees, investment managers, representatives of selected parastatals, Government Ministries, the Public Private Partnership Commission, and other stakeholders,” noted Kabambe.
According to Kabambe, the symposium will run from 8:00am to 1:30pm, and participation is by invitation.
Current data, according to Kabambe, shows that as of March 2019, a total of 422,993 employees were on pension from 102,505 in 2011.
The data indicates that during the same period accumulated pension savings reached K757.4 billion from K74.8 billion in 2011, reflecting an average annual growth of around 33 percent and that as of March 2019, pension funds were equivalent to 14.4 percent of the Gross Domestic Product, doubling from a paltry 6.4 percent in 2011.
“While significant progress has been made in accumulating pension funds, there has been little progress in directing some of these funds towards infrastructure development,” Kabambe said.
He said a significant proportion of the investments are short term.
Investments in infrastructure, recent studies show, provide duration hedging hence attractive to institutional investors like pension funds.
According to the RBM chief, such long term investments provide a match to the liabilities of pension funds.
“At the same time, investments in infrastructure have a catalytic role in the economy as they increase socio-economic activities associated with them.
“The world all over, pension funds have played a critical role in developing infrastructure in energy, water, agriculture, roads, commercial, residential properties and many other sectors,” he said.
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That’s a very good move. Actually in other countries like Zambia for example most of the infrastructure you see in Cairo road was built using pension funds. This is what we should be doing instead of letting the crocked Asians own properties both residential and business premises.