The ANC’s election manifesto says it intends to investigate prescribed assets to fund social and economic development. In how many ways is this a bad idea? The short answer is a lot. Prescribed assets, or the notion of the government forcing savers to invest in government and parastatal debt, was a feature of the apartheid regime when at a one point investment funds had to invest 75% of their funds in government or state-owned enterprise debt. The regime was essentially an act of economic desperation since SA’s capital markets were largely shunned by the world. When SA opened its capital markets in 1994, the regime was scrapped, and money flooded into SA in huge quantities, to the extent that now about 40% of SA’s R1.7-trillion in government debt is owned by non-residents. Setting up a prescribed asset regime could be structured to exclude non-residents, just as SA’s exchange controls prejudice South Africans but not foreigners, a peculiar situation if ever there was one. But if the...

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