Government’s R141 million PIC payday

Africa’s largest fund manager said assets under management reached a record R3 trillion last week, buoyed by improved sentiment following the May 29 elections that resulted in a coalition government.

CIO Kabelo Rikhotso told reporters at a results presentation Wednesday that assets under management by the Public Investment Corporation (PIC), which handles the pensions of government workers in South Africa, reached the key threshold on September 26. 

Consumer confidence in Africa’s biggest economy surged in the third quarter to a five-year high, while household wealth jumped after markets rallied following the formation of a so-called government of national unity.

President Cyril Ramaphosa of the African National Congress — which lost its majority for the first time since 1994 in the May vote — set up the coalition that includes the business-friendly Democratic Alliance and other parties. 

“I feel very positive about the country, and we have seen a huge improvement,” Rikhotso said. 

The PIC’s assets under management for its fiscal year that ended March 31 rose 3.6% after stronger returns from international and listed portfolios countered muted economic growth in South Africa.

CEO Abel Sithole said at the briefing that AUM climbed to R2.69 trillion in the year. It will pay the government a R141 million dividend. 

In the period under review, the continent’s most industrialized economy experienced record power outages in the PIC’s fiscal year, and a financial watchdog placed the country on a global dirty-money list in February of 2023, which subjects business transactions with a South African component to more scrutiny. 

The constraints contributed to the economy expanding just 0.6% last year, the smallest increase since the 2020 contraction due to the Covid-19 pandemic.

Gross domestic product has grown by an average of less than 1% over the past ten years — insufficient to cut a 33.5% unemployment rate, among the world’s highest.  

But since the May 29 election, the rand has gained 5% to the dollar and local-currency bonds have outpaced all peers in an emerging-market index with returns of 24% in greenback terms.

The PIC’s profit climbed 22% to R271 million in the year to March, boosted by the performance of its foreign, unlisted and fixed-income portfolios, the PIC said in a statement.