PIC chief warns on dangers of youth unemployment: Public Investment Corporation
CEO says of one allows the impatience of the youth to go unchecked, the
country can potentially burn
http://www.businessday.co.za
2 September 2011
EVAN PICKWORTH and SURE KAMHUNGA
CAPE TOWN - SA could burn if youth unemployment is ignored, says Elias Masilela,
CEO of the Public Investment Corporation (PIC).
Youth protests affected large parts of Joburg's central business district
this week, with many protesters bused in by the African National Congress
Youth League calling for a leadership change to improve their lot. "If you
allow the impatience of the youth to go unchecked, the country can potentially
burn," Mr Masilela said at the annual African Cup of Investment Management
conference.
"We must look at the way we invest and take account of youth unemployment.
If the youth become impatient, then it is very difficult to stop them."
He warned that protests elsewhere in the world needed to be a lesson on
managing and improving economic performance. Youth unemployment in SA is
70%. Mr Masilela said targeted investments could affect their plight.
A "myopic approach" that focused on SA to the exclusion of the continent
, and reliance on foreign investment flows , were not solutions for the
asset management industry, he said. He wanted to see a far greater focus
on the risk-management aspect of the sector from an African - and not just
a South African - perspective.
The PIC , Africa's largest asset manager, plans to invest about R45bn in
African countries over the next three years to exploit growth opportunities
that are drawing global investors to the continent.
The investments would be in selected listed equities and in sectors such
as infrastructure, mining, telecommunications and retail , Mr Masilela said.
He said the investment was aimed at achieving an annual rate of return of
at least 3%.
The PIC wanted to diversify and expand its market reach and maximise earnings
for the state pension fund, on whose behalf it manages funds worth about
R1-trillion.
"We are planning to invest about R45bn initially, but whether we will increase
this will depend on how quickly we deploy the funds," Mr Masilela said.
"(That) is a lot of money, so we plan to invest over three years and thereafter,
we will expand as we gain sufficient knowledge and the capacity to implement
further projects."
Mr Masilela said Africa was no longer the basket case it was once perceived
to be by western investors, but he warned that interest in the continent
might not last given the speed with which capital moves at the slightest
sign of uncertainty.
Analysts agreed, pointing to the capital flight from Africa during the height
of the recent uprisings in North Africa, estimated by some asset managers
to have been as much as $30bn.
But Mr Masilela said the PIC saw Africa as a natural market for investment
. It would initially target Anglophone sub-Saharan countries as legal and
regulatory structures were similar to those in SA, he said.
The choice of sub-Saharan Africa was motivated by studies that showed the
region had some of the fastest-growing economies among emerging markets.
A recent report by Rand Merchant Bank said sub-Saharan Africa had an estimated
potential market of 840-million people with purchasing power of up to $1,9-trillion.
Mr Masilela said the choice of sectors such as telecoms, infrastructure
and mining was natural, considering that these were the focus areas of other
investors, particularly those from Asia.
"For us, the key consideration is driven largely by the growth and development
potential of these sectors, particularly when you look at infrastructure,
mining, consumer and telecoms." With I-Net Bridge |
