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Teamwork to tackle SA’s troubles

South Africans are suffering in this tough economic climate. The savings rate, as well as the return on those savings, is depressed. Something is needed to drive the economy forward.
Justin Ma

Justin Ma

Credit Alternatives: portfolio manager

Kgahliso Molabe

Kgahliso Molabe

Credit Alternatives: investment specialist

The symptoms are not only primary (such as lower earnings or a continued rise in unemployment) but also secondary (such as increasing levels of crime). Basic services have suffered, including the quality of education and medical services.

Our strategic focus includes investing in various developmental sectors of our economy and has enabled us to make a meaningful contribution to the growth of the nation as a whole. Building on our earlier successes in infrastructure-related investments since 2012, we were invited to participate in, and have subsequently implemented, several projects with public and private sector partners during the first half of 2018. These were also all infrastructure-related.

Apart from the significant long-term benefits of each project, they also have a social impact, including contributing to the creation of about 950 equivalent jobs (based on hours of work) over the project lifetime, the powering of an equivalent (based on hours of consumption) 465 925 homes with clean energy, the laying of 360km of fibre and the opening of a 200-bed hospital.

Infrastructure services generally have a multiplier effect on economic growth while uplifting living standards for affected people and communities.

Our team spends a significant amount of time and energy on identifying and then performing a due diligence on appropriate types of investments for our clients. This gives us an opportunity to get very close to the details as well as to other stakeholders in the projects, which in turn grants us the ability to influence the outcomes of the transactions constructively in favour of our investors.

Typical investments include those secured by tangible assets, which are defensive throughout economic cycles and are structured to enable us to take extraordinarily long-term views, of up to almost 20 years in some cases, on the investments themselves. The overriding benefit of this strategy is that we can generate the highest quality of returns (which often serve as an inflation hedge), increased governance and transparency, and ultimately capital preservation for our investors.

To do more of these types of investments, we require greater collaboration between the state and the private sector. Investors in SA are willing and able to support large infrastructure projects across a wide spectrum of opportunities. For this, we need timely and coherent policy frameworks and efficient, well-capitalised institutions with which we can work or invest.

A positive example of what we look for is the long-awaited draft Integrated Resource Plan 2018 which acknowledges both the reality of the current energy situation and future expectations. The draft plan proposes a greater focus on a cleaner and vibrant economy through the combination of photovoltaic, wind and gas energy facilities. Another example is the constructive steps being taken towards achieving an acceptable charter for stakeholders in the mining sector.

We actively encourage greater co-operation between the private and public sectors to unlock investment opportunities that will make a real difference to the country as well as lay the foundation for future capacity and further economic development. This is a fundamental requirement. We look forward to the day where there will be multiple partnerships and a more resilient South Africa.

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