Inside BPOPF’s plans as billions drift back home
Mbongeni Mguni | Wednesday December 13, 2023 10:04
Mmegi: The Non-Bank Financial Institutions Regulatory Authority has published the revised pension fund rules, which require that pension funds repatriate a certain percentage of their offshore holdings in the years to 2027. Into what areas does the BPOPF expect to invest these repatriated funds into locally?
Malindah: Our main focus or where we really want to place is on the infrastructure side and as these amounts come in, we are going to be playing there. Infrastructure is a very difficult asset class to penetrate because it takes a long time, it’s contract based and there are a whole lot of things that need to happen.
We know that and we are aware that the amount of money is coming in stages. You might not be able to deploy it all into infrastructure so there may be some temporary structures that we use. But the destination for that money is infrastructure.
There will be other strategic investments in big ticket items that we are looking at on the private equity side that we might play in. But these are negotiations and some might not come into play.
We are looking at those strategic investments that can really be game changers in the country. There might be certain things that you look at the country and say ‘why don’t we have a local outfit for such an industry?’ You can look at and say, ‘why don’t we have an indigenous bank for example?’ That’s strategic and those kinds of things are things we could be looking at to see if we can participate.
Mmegi: Previously, the BPOPF said it was establishing a P3 billion allocation for local infrastructure. Please provide an update on any investments made in this regard?
Malindah: We didn’t make a lot of traction in that space because like I said infrastructure is very difficult to play and it takes time. We have appointed a manager who is going to look for opportunities for us and we are at the tail-end of that appointment.
Obviously it’s going to take the manager time to deploy the cash. That’s why I said we have not made in-roads in terms of deploying, but in terms of things that we need to do, we have done a lot. We are happy with where we are; we would have loved to have invested that P3 billion and it’s been many years talking about it, but infrastructure takes time.
Mmegi: What areas of interest does the BPOPF intend to pursue with the repatriated funds and what leads, if any, have been generated in this regard?
Malindah: When we talk about infrastructure, we remove property because we have a specific property mandate. It can be energy, water sector, we have issues around power. There’s a lot of infrastructure projects in that space, roads and others. The pipeline in infrastructure is endless and that’s why we don’t believe anyone can say there are no opportunities in Botswana. They are there, but they take time to put together.
Mmegi: Some market commentators have spoken of the danger of these repatriated funds winding up in cash holdings or Bank of Botswana Certificates. What is the BPOPF's comment on ensuring that the repatriated funds generate adequate returns for pensioners and also achieve the development goals government is seeking?
Malindah: Our position is that we really support this move and we have stated that we do support the idea to invest more locally. Even before the regulation change, that was the intention of BPOPF. It was at 70/30 and we have been operating at a 60/40. We have always been moving towards that and the call to 50/50 is not a big jump because it means 10 percent coming into Botswana.
Policymakers when they say move these amounts, they did not prescribe or dictate to say this money has to be in the bank or the BoBCs and I think people need to avoid those conversations where it’s assumed the funds will go there. The changes are not taking away our duty, our responsibility to ensure we get a return and there are opportunities in the country.
The policymakers are aware of that and they have given the market participants time to deploy the funds. We are not asked to do that next year; we have been given a five year period so that we can look for these opportunities and be able to do so. We really support that.
We are not saying it’s going to be easy. Investment is difficult but you cannot wait for a time when opportunities will be there. People say we can’t do this now; when are we going to do it? It’s been how many years from the time we had a discussion of doing a reverse to 30/70? That was about eight years ago and even then we were saying it’s not the right time. Even if we are given another eight years, we will saying the same thing.
We are not saying it’s going to be easy but we need to get into the trenches and get to work. We are not saying the money will come and we already have ready investments, but we have to get to work. The money is not intended to go into an account and just stay there. That’s not what the regulator is saying; they are saying invest more locally. They are not replacing our investment strategy; we still have our investment strategy and they still expect us to diversify across asset classes and that’s what we are going to do, but do more in the country.
Mmegi: Government is finalising preparations for NDP 12 and has called for greater private sector funding in the Public Investment Programme. How can the BPOPF participate in this push and what plans, if any, do you have?
Malindah: Some years back we used to cry that government has a lot of money and they don’t need anyone to help with what they need. We like the current situation where government is coming to say we need the private sector to participate because now we cannot cry and say they are crowding us out.
There are opportunities in the country and it’s good when you are invited. Take infrastructure for example: government is able to do a lot of this without inviting the private sector. But as soon as they open the door and invite the private sector, it means more for institutional investors especially pension funds being able to play a meaningful role in the economy. That’s very good news for us and we have been praying for that for a long time.
Over three years now, they have been opening doors for us. We have been knocking on government doors and they have been saying this is what we have, and how can we work together. For us, it means the pipeline of opportunities has increased and we have choices in terms of what we can do.
Though I will not mention specific projects, but there are specific ones we have looked at that government has. We were not able to conclude some and there are some we are looking at.