SA’s Envisaged Liberalisation Excites Market

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By Wezi Tjaronda WINDHOEK The envisaged relaxation of exchange controls in South Africa will be important for the Namibian economy, as pension fund members would get higher returns. If it happens that the exchange controls are relaxed, asset allocations would increase as fund managers would have a bigger choice of where to invest their money. South African pension funds at the moment are allowed to invest 15 percent offshore and the rest locally, while the investment of unit trusts funds has increased from 20 to 25 percent since last year in October. Coronation Fund Managers Head of Institutional Business, Kirshni Totaram, says the move would not only open up an investment universe, which would enable the managers to diversify their portfolios, but fund managers would have access to wider different rates of economic growth. “For balance, funds asset allocation becomes more important, while it affords the ability to improve the risk return of the portfolio,” she added. The historical relationship between Namibia and its neighbour, South Africa has seen the former adopt policies of its neighbour, a relationship that is foreseen to remain intact. The relaxation of the exchange controls would mean that South African investment funds would determine how much more money they will have to invest offshore. Coronation Fund Managers have a 47.14 percent shareholding in Namibian Harvest Investment Limited, which owns Namibia Asset Management (NAM). Totaram said yesterday at a meeting organised by NAM that exchange controls in South Africa would gradually be replaced by investment guidelines. It is envisaged that when this happens, there will be no limitations in South Africa as to how much money asset managers and investment funds can invest offshore. She however cautioned that it would not be wise for a company to invest between 70 and 80 percent of the funds offshore. She noted that governments have expressed concern over the investment of money offshore and not in the countries of origin where the money would be used for development. This week, South African Reserve Bank governor, Tito Mboweni, said he did not see the reason behind the country’s remaining exchange controls, which have been gradually liberalised over the past few years. He said the burden of administration that fell on the Central Bank was not worth the effort, adding that the government was committed to the gradual relaxation of exchange controls. As far as emerging markets such as South Africa are concerned, Charles de Kock noted that the markets, which are characterised by low interest rates, would attract more investments. “As interest rates lower, investments try and get better yields and more money flows to emerging markets resulting in a big difference for asset markets,” he added. De Kock added that the domestic economy of South Africa and the region, given the favourable economy, offered a fantastic environment, as it was less volatile. South Africa has been a favourable destination because of the growth it is experiencing. De Kock predicted that the country would see more foreign investors who want to take advantage of the growth. Namibia Asset Management (NAM) currently manages N$6.96 billion in assets on behalf of various corporate and individual clients.