PIC to Use Part of Its $140 Billion in Assets to Boost South African Jobs

The Public Investment Corp., Africa’s largest pension fund manager, will invest in education and training projects as it switches focus to take on an increased developmental role in an effort to cut unemployment.

The PIC, which manages 1 trillion rand ($140.4 billion) mostly for the Government Employees Pensions Fund, wants to use its size to spur growth in South Africa, where one in four people is without a job. The money manager, which has a dual mandate of development and commercial investments, targets an overall return of South African inflation plus 3 percent.

“The GEPF wants to influence the economy so that the returns are within their control,” PIC Chief Executive Officer Elias Masilela said yesterday in an interview in Durban, South Africa. “Investment must increase efficiency and productivity and create jobs. Only then can the GEPF be guaranteed of a safe return.”

The PIC will invest funds from the government pension fund into the improvement of infrastructure, such as roads and telecommunications, as well as education and housing, that can be used to make workers more productive, he said.

“Investment can no longer be simply about a return on investment,” Masilela said. “We need to invest in the economy in order to make it grow.”

Private companies are the main driver of jobs and not the government, which should rather invest in capital programs. “We also need to look at the reduction in costs of production, including the cost of labor,” he said.

‘Greatest Challenge’

The Pretoria-based money manager will also look at increased coordination and partnerships with other government entities, such as the National Empowerment Fund and the Industrial Development Corp., to boost funding and training for small businesses, targeting younger people without work or an education, Masilela said. More than half of people between 15 and 24 are unemployed, according to Statistics South Africa.

“Our great challenge here in South Africa is to get the youth sufficiently educated and trained, and then employed,” he said. “I’m not looking at formal employment, I’m looking at them doing it for themselves.”

The PIC will also continue to boost its investments in Africa, with 5 percent of its funds under management allocated to the rest of the continent.

“South Africa is not operating in isolation,” he said. “As we do business as a country we will make sure that we have an impact elsewhere on the continent and we will also be influenced by what happens elsewhere in Africa’s economy.”

To contact the reporter on this story: Niki Moore in Johannesburg at nmoore19@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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