Africa’s largest pension fund, the South Africa based Public Investment Corporation (PIC) has said that it will invest about invest 70 billion rand ($5 billion) in South Africa over the next three to five years. The PIC says the investments is meant to help stimulate economic growth and job creation.
The PIC is said to have over 1.8 trillion rand under management with investments contributing towards approximately 12% of the market capitalisation of JSE Limited, Africa’s Largest Stock Exchange. The JSE is valued at over $ 1 trillion (Nigerian stock exchange is valued at $35 billion) in market capitalization and ranked 18th in the world for Equity Market capitalisation according to the World Federation of Exchanges (WFE).
Nigeria’s Pension Fund Assets is worth over N4 trillion and is invested mostly in Fixed Income Equities which for the most part of the year have had negative real returns (adjusted for inflation). Unlike their South African counterparts, Nigerian pension fund is not managed by the Government but strictly regulated about where and what it can invest in.
Nigeria is also facing an economic downturn triggered by the drop in oil and other commodity prices. The Buhari led government has introduced capital controls and other protectionist policies focused at reducing the demand for foreign goods and hoping it will stimulate local demand. The Government also put forward a massive N6 trillion budget which it hopes will help stimulate the economy. The Budget will be part financed by a hybrid of local and foreign debt with the former sourced via sale of bonds and treasury bills. Nigeria Pension Funds typically scoop up these debt offerings even thought they deliver paltry yields.
The PIC also has shares in Nigeria’s largest quoted company, Dangote Cement, investing about N49 billion in the company in 2013.