Hon Chairperson, I do apologise for that misbehaviour because I was called upon and then I was not in.
Patrick Cairns is a financial journalist for the Moneyweb. To use an oxymoron, Patrick's article in the Citizen a week ago about asset prescription is a dark light. He describes prescribed assets as the practice of government forcing pension funds to allocate a portion of their portfolios to speci?c investments, like government or parastatal bonds.
What Patrick doesn't say, however, is that asset prescription is regulated in our law. To be speci?c, Regulation 28 of the Pension Funds Act sets out the parameters for prescribing assets, and to whom they may be prescribed.
Not only is Regulation 28 granular about the parameters under which assets may be prescribed, it also makes it a requirement for a fund and its Board, before making a contractual commitment to invest in a third party managed asset or investing in an asset, to perform reasonable due diligence, taking into account risks relevant to the investment including, but not limited to credit, market and liquidity risks, as well as operational risk for assets not listed on an exchange.
The enormity of the responsibilities placed upon the Fund's Directors discredit fears about the investment returns from the state-owned enterprises, SOE's. Section 162 of the Company's Act allows errant directors to be declared delinquent. As a result, any attempt to prescribe assets will be done in a manner set out in the law.
We must never under appreciate the fact that, while SOE's have performed badly in the recent years, the possibility of prescribing assets to further socio-economic and infrastructure development remains un-impeachable. Our economy is stagnant,
with signs of depressive low growth, increasing expenditure and low revenue gains.
Unlike quantitative easing, the AIC supports the prescription of assets. We find it ironic that the people who are opposed to the prescription of assets, as an ideal socio-economic stimulus, are the cheerleaders of a sovereign wealth fund. Thank you