Sponsored
Picture: ARERAK SIRIPHO
Picture: ARERAK SIRIPHO

South Africans are suffering in this tough economic climate. The savings rate and the return on savings, is depressed. Something is needed to drive the economy forward. The symptoms are not only primary (such as lower earnings or a continued rise in unemployment) but also secondary (such as increasing levels of crime). Basic services have suffered, including the quality of education and medical services.

Stanlib’s strategic focus includes investing in various developmental sectors of the economy and has enabled it to make a meaningful contribution to the growth of the nation as a whole.

Building on earlier successes in infrastructure-related investments since 2012, Stanlib was invited to participate in, and have subsequently implemented, several projects with public and private sector partners during the first half of 2018. These were also all infrastructure-related.

Picture: KGAHLISO MOLABE, CREDIT ALTERNATIVES: INVESTMENT SPECIALIST
Picture: KGAHLISO MOLABE, CREDIT ALTERNATIVES: INVESTMENT SPECIALIST

Apart from the significant long-term benefits of each project, they also have a social impact, including contributing to the creation of about 950 equivalent jobs (based on hours of work) over the project lifetime, the powering of an equivalent (based on hours of consumption) 465,925 homes with clean energy, the laying of 360km of fibre and the opening of a 200-bed hospital.

Infrastructure services generally have a multiplier effect on economic growth while uplifting living standards for affected people and communities.

Stanlib’s team spends a significant amount of time and energy on identifying and then performing a due diligence on appropriate types of investments for its clients. This gives Stanlib an opportunity to get very close to the details and to other stakeholders in the projects, which in turn grants the ability to influence the outcomes of the transactions constructively in favour of its investors.

Typical investments include those secured by tangible assets, which are defensive throughout economic cycles and are structured to enable us to take extraordinarily long-term views, of up to almost 20 years in some cases, on the investments themselves.

The overriding benefit of this strategy is that we can generate the highest quality of returns (which often serve as an inflation hedge), increased governance and transparency, and ultimately capital preservation for our investors.

Picture: JUSTIN MA, CREDIT ALTERNATIVES: PORTFOLIO MANAGER
Picture: JUSTIN MA, CREDIT ALTERNATIVES: PORTFOLIO MANAGER

To do more of these types of investments, greater collaboration between the state and the private sector is required. Investors in SA are willing and able to support large infrastructure projects across a wide spectrum of opportunities. For this, we need timely and coherent policy frameworks and efficient, well-capitalised institutions with which we can work or invest.

A positive example of what we look for is the long-awaited draft Integrated Resource Plan 2018 that acknowledges both the reality of the current energy situation and future expectations. The draft plan proposes a greater focus on a cleaner and vibrant economy through the combination of photovoltaic, wind and gas energy facilities. Another example is the constructive steps being taken towards achieving an acceptable charter for stakeholders in the mining sector.

Stanlib encourages greater cooperation between the private and public sectors to unlock investment opportunities that will make a real difference to the country as well as lay the foundation for future capacity and further economic development.

Justin Ma is Credit Alternatives: portfolio manager and Kgahliso Molabe is Credit Alternatives: investment specialist

This article was paid for by Stanlib.