We can learn from other countries that have been in the space for a long time – NBFIRA
These investments can provide an annuity type of flow for pension fund – Bifm
Capital market enthusiasts are buzzing with anticipation as whispers of an infrastructure fund echo through the financial corridors of Botswana, potentially heralding a seismic shift in the landscape. The stage is set, with excess liquidity poised to cascade into the country, aligning with the freshly minted Pension Fund Rules (PFR2).
This revelation took center stage during a riveting discussion on ‘Pension Regulation and Opportunities for the Development of the Bond Market’ within the hallowed halls of a recent bond market panel. PFR2, the herald of change, now mandates a balanced 50/50 split for pension funds, dividing their financial allegiance between onshore and offshore investments. The implementation unfolds in measured phases starting next year, promising an estimated repatriation of a substantial P3.7 billion annually until the curtain falls in December 2027.
The groundwork laid by Botswana in the realm of infrastructure allocation is not to be underestimated, with a noteworthy 5% dedicated to this nascent asset class—unprecedented in previous portfolios. Dr. Thuto Mahlanza, the sage Director of Retirement Funds at the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), emphasised the need for industry and regulatory empowerment in the face of this new frontier.
Drawing on global wisdom, Dr. Mahlanza advocated, “We need to capacitate the industry and the regulator. But we can learn from other countries that have been in the space for a long time, countries like Canada and Australia,” sharing pearls of insight during the enlightening panel discussion.
In this dance with novelty, the freshly minted regulations pivot toward non-traditional asset classes, placing the spotlight on infrastructure and others. Clair Mathe-Lisenda, the astute CEO of Botswana Insurance Management Fund (Bifm), elucidated the intricacies, underscoring that infrastructure funding, in this context, must flow through a designated infrastructure fund.
Mathe-Lisenda, a visionary in her own right, accentuated the void within the local industry, declaring, “We don’t have an infrastructure fund, which presents an opportunity to the industry.” However, cautioning against the allure of the unknown, she emphasised the need for meticulous structuring, recognising that the devil lurks in the details of this groundbreaking venture.
The uncharted waters of infrastructure investments beckon, and Mathe-Lisenda noted, “If executed well, these investments can provide an annuity type of flow for pension fund” a tantalising prospect for the discerning investor in search of financial continuity.” As the curtain rises on this new act, the financial maestros of Botswana stand at the precipice, ready to orchestrate a symphony of change in the world of capital.
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