People in South Africa are getting a little panicky about calls for Nationalization of mines and banks and with the recent ratings downgrade of South Africa this is becoming more of an issue.
Retirement Fund managers are finding themselves in a quandry with investors seeking returns way above inflation and the need of South Africa as a country to have access to funds for future growth and development. Fund managers need to look towards the future and are being encouraged to do so at the possible expense of shorter term returns by investing in companies and infrastructure projects that are environmentally conscious. The key here is that while we all agree there needs to be significant investment in projects and companies that have the ability to grow job creation, will the investment community be prepared to up their risk profile.
Essentially, if we are able to invest in job creation projects, projects that have a positive impact on the environment and hence on the economy, projects that promote social upliftment or any project for that matter that will help improve the lives of the majority of South Africans living in poverty, we will all be in a better position with fewer and fewer people supporting such radical ideas as the Nationalization of the Mines and banks.
These radical ideas are like a red flag to a bull in the investment community with so many examples of dramatic failures and hence the downgrade. Our bonds are looking a little risky for many foreign institutional investors which is certainly no good for the South African currency inflows and puts even greater pressure on the retirement industry to fund development.