You’re a government in a developing country and you require billions of rands to deliver on your promises to create a better life for all. Where do you get the money?
Given that you have a small percentage of people paying tax (and at least a third of your country is so poor they rely on government grants) and these taxpayers are already at the limit of what you can squeeze out of them in terms of direct tax, levies and even VAT, what’s next?
Perhaps you can borrow money – but that is becoming more and more difficult, because the international ratings agencies are progressively downgrading your risk status because of your unstable politics and some of your worrying populist monetary policies.
Perhaps you can go to the international organisations – such as the World Bank and the International Monetary Fund – cap in hand, asking for bailouts.
But there goes a chunk of your national sovereignty and the medicine might be worse than the disease. (If in doubt about that, ask Zimbabwe…)
So, if you’re the ANC, you start looking at that vast pool of money sitting in pension funds (about R4 trillion) – by some estimates, the fourth-largest in the world. And then you move.
In the party’s election manifesto, released on Saturday, there is an amplification of the vague pledge at last year’s Nasrec elective conference that government introduce measures to force fund managers to invest in “prescribed assets”.
This means a certain portion of all retirement funding will be channeled to “socially productive investments [including housing, infrastructure for social and economic development and township and village economy] and job creation”.
And probably to loss pits like Eskom, SAA and other catastrophically badly run state-owned enterprises.
It’s a subtle way of redistributing wealth … but which could do immense damage in the long run.