Prescription of assets is unacceptable, should be rejected by all
18 August 2019
The head of the ANC’s Economic Transformation Committee, Enoch Godongwana, is reported today as confirming that the ANC would impose prescribed assets on private pension savings, before it would consider approaching the International Monetary Fund (IMF). His comments also confirm that prescribed assets will not be limited to the R2-trillion funds held in the PIC, but will apply to all retirement funds, banks, insurance companies and so on.
If the ANC was serious about growing the economy, and attracting investment, this would be the very worst thing to do. Godongwana’s comments signal the ANC is even prepared to return to the last-ditch, desperate measures taken by the National Party apartheid government, which also imposed prescribed assets when that government ran out of money to fund its many failed programmes.
Asset prescription is an irresponsible and unacceptable policy proposal. It should be rejected by every South African who has their life savings in their pension funds, and whose future financial security depends on the responsible management of those funds. The Democratic Alliance will oppose any effort by the ANC to impose prescribed assets. We will act to protect the pension savings of hard-working South Africans.
The term “prescribed assets” is a euphemism for forcing pension funds, banks and insurance companies to lend money to bankrupt state entities like Eskom and SAA.
These financial institutions hold the private savings of millions of ordinary South Africans, and for many (if not most) of these people, their pension savings are their only life savings. That is why there is a duty to ensure their money is managed with the utmost care and responsibility, and that nothing is done that actively harms their long term financial interests.
Far from even considering a proposal as devastating as prescribed assets, the ANC and Godongwana should be earnestly considering what tough reforms are necessary to avoid a situation where either asset prescription or an IMF bailout programme are ever needed. That the ANC is not doing this is an admission of defeat and failure.
Issued by Geordin Hill-Lewis, DA Shadow Minister of Finance, 18 August 2019