Thursday, June 4, 2020

Climbing the infrastructure ladder: what’s in store for Botswana’s Pension funds?

BY CEDRIC SWANKA

A lot of effort is needed in finding alternative finance for Botswana’s infrastructure, local industry experts have said.

The experts shared notes at the Botswana Asset Owner’s forum held in the capital Gaborone this past week.

Gosego January – Chief Executive Officer at Debswana Pension Fund said that there is need to review infrastructure investments strategy.

A good investment he said would encourage economic development, boosts gross domestic product growth and leads to employment creation.

On why infrastructure investing, Bopelokgale Soko Director of Retirement Fund Department at Non-Banking Financial Regulatory Authority (NBFIRA) shared that Pension Fund and other institutional investors are targeted as the channels through which environmental and social policy objectives can be achieved. Pension Funds play a significant role in the global capital markets and in the global economy.

The NBFIRA Director of retirement fund presented on pension fund value creation through the lens of the regulator. She further continued that there is a shift in the investment decision making process, a shift in the value creation process and ultimate objectives of pension funds. As pension funds have grown to include non-monetary objectives.

The forum held under the theme enhancing Asset value through long term investment was aiming to enable critical and thought-provoking discussions on how pension funds, their fund managers and the general investment management industry in Botswana. As well as Pension funds should focus on long-term strategic collaborations to advance economic growth in the country.

Kgotso Botlhole Managing partner at Lekorowe legal minds said there is need to advocate for a legal and regulatory framework that makes Botswana an attractive destination for global funds. A proliferation of global funds in Botswana would invariably lead to an increase in infrastructure funds.

Botlhole was presenting on the legal context for infrastructure projects financing. Law firms play a vital role in giving private sector equity and debt investors the comfort with the risks they are taking on. The due diligence phase is an example how lawyers give investors comfort

Pressure is sometimes exerted on lawyers to complete the process quickly. If legal risks are not properly identified and managed this may lead to unimaginable losses. He revealed.

Botswana should strive to compete with jurisdictions like Luxembourg (largest European fund domicile and the second largest fund center in the world after the United States of America) and position itself from a legal and regulatory perspective as an investment fund center. Botlhole said

The private sector can be proactive on this aspect and commission its own research on the comparative legal framework of these jurisdictions and present the findings to the government. He continued

A need to focus on a change in perspective as opposed to changing the entire system. There is a need to broaden our perspective and see an investor not only as an individual but to include funds as investors.

It is time to focus on unlocking indigenous sources of financing to address this concern such as cooperatives, motshelo etc. Indigenous sources of financing infrastructure, if properly harnessed, are less stringent.

The two day event was arranged by Capital Botswana and African Alternative bringing stakeholders from the fields of pension funds and the investment and infrastructure industries.

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