GIPF: From despised villain to admired hero

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Desie Heita
Windhoek

This financial year would see the Government Institutions Pension Fund (GIPF) pump billions of dollars into the local economy, through both listed and unlisted entities, and already the chief executive officer of the fund, David Nuyoma, is enthusiastically “looking forward to see what the final impact would be of these investments once they are into the economy.”

So far GIPF has appointed six investment managers – they would eventually total eight – who would be tasked with managing about N$2 billion of pension funds that would be invested into unlisted entities in various sectors of the economy. GIPF is particularly interested in energy generation and supply, national infrastructure, private equity and business development.

Nuyoma, in a wide-ranging interview with New Era Weekend, points at the fact that each time there is call for expression of interest to those with money to participate in funding development projects and infrastructure, the group of those interested would be made up of foreign institution funds. That shows there is money to be made in the local market, says Nuyoma, before asking rhetorically why shouldn’t GIPF be one of those making money in that space.

“We are now at the final stages of finalising the modalities of investing in infrastructure in Namibia. We believe there are opportunities out there, and these opportunities would catalyse further the local economy,” he says.

Hence the fund would look at long projects such as water generation and supply for the country or any such projects that would earn the fund decent returns for the many years to come. The intervention in business development is a deliberate one, precisely because GIPF “wants to see entrepreneurship taking place. Because, at the end of the day, that is really what would make our economy grow,” he says.

He is nevertheless emphatic that the investment choices would be made with due care. “That is why the process [to finalise the investments] is taking longer than one would have liked it but we have to do it correctly so that when you put in that money it makes an impact that one would like to see and at the same time you have the sustainability required to have the revenue stream you would like to see,” he says.

And when he says sustainability he is speaking of not five years but, quite literally, of a time beyond the lifespan of many of those alive today.
“This is beyond me and many of us today. [It is] so that those who are starting work today are catered for when they retire.”

GIPF can afford to make such investments. It is now standing at N$98 billion in pension funds, having achieved a rare growth of 8 percent in the previous year when virtually every fund in the market registered much lower growth and some negative growth.
Personally, Nuyoma would have preferred that the fund registered a double digit growth – he actually says the 8 percent growth “is not a very exciting growth” – but does concede that “knowing what is going on in the market we can also say that it is still a respective growth.”

“There are funds that have grown little and some even in the minus. So in that context I can say the fund is stable,” he says. He attributes the higher growth rate to the way they structured the portfolio in a manner that the fund was “immunised to all sorts of shocks of last year”.

His mission now is to use such a good strong reserve with prudence and discipline, partially because economic shocks come and go, and the future is always uncertain.
The other reason for adopting the pennywise approach as the True Testament is because of this statement by Nuyoma: “We should remain always cognisant why the fund was created, and that means we have to look at the core business of the fund, which is really to provide pension benefits to retired civil servants and other members of the fund that are affiliated one way or the other to GIPF and beneficiaries.”

The fact that GIPF board of trustees agreed to increase pension benefits by 7 percent, to make adjustments to the pensions so that pensioners can cope with the inflationary pressure, is “a reflection that we are still in a position to do so”, he says.
The size of the fund makes GIPF the biggest investor in Namibia. And it is no surprise that the GIPF name has in previous years been associated with investments that have gone awry.

Besides the unlisted entities, GIPF is also going to pump billions of dollars in the listed investments, and the amount of money would be way above the current prescription that 35 percent of pension funds must be invested locally.

The just announced acquisition of 25 percent of issued ordinary shares of Capricorn Investment Group Limited, the owners of Bank Windhoek, is just a start he says.
“Am very excited about that,” Nuyoma says of the deal. “First of all it enables us to increase our local stock, from foreign land, especially from across the border,” he says.
It is for this reason that Nuyoma says GIPF is not at all concerned with the imminent change in legislation to compel pension funds to invest more than 35 percent of their assets locally.

“We want the money to be invested so that it does what it is supposed to do for the economy and our fund,” he says.

GIPF has adopted what it calls a Development Investment Policy, whose intention is to look at “what are those impactful local assets in which we can invest to provide a steady return to the fund, but at the same time beyond the regulation 28 and 29 also to have a further impact.”

*This is an abridged version of a story originally published in New Era Weekend.

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