IN THIS ISSUE

Dear stakeholder

ASISA in collaboration with the Investment Mobilisation Programme (IMP), established by President Cyril Ramaphosa, organised a dialogue session in August for senior representatives from ASISA member companies with Presidential economic adviser, Trudi Makhaya, and investment envoy, Trevor Manuel.

The dialogue formed part of the IMP’s preparations for the Investment Summit planned for later this year, which aims to engage South Africa’s captains of industry on how to attract private sector capital to achieve economic growth.

Trudi Makhaya and Trevor Manuel positioned their mandate, which includes raising $100 billion in new investments over the next five years and closing the gap in domestic direct investment that has emerged over the past 10 years.

Over the last 20 years, the public sector has spent R2.7 trillion on infrastructure development. ASISA members have indirectly participated in the funding of this expenditure through the capital markets. They have invested R1.3 trillion on behalf of pension fund members, policyholders and unit trust funds in Government, local authorities and State Owned Enterprise (SOE) bonds. Banks and ASISA members also financed over R200 billion towards 112 projects for the Independent Power Producers Programme. However, direct finance through Public-Private Partnerships has been in decline, with only R5 billion in projects being finalized in 2016/17.

Other points raised by the Presidential delegation included:

• Catalysing economic growth through investments and a stimulus package;
• The need for a stabilisation strategy for SOEs;
• The need to identify investable programmes; and
• Developing a five-year pipeline of investment.

ASISA member representatives responded by requesting greater integration of dialogue with Government. A potential solution could be the establishment of a permanent forum where business and Government can discuss the building of South Africa Inc.

The savings and investment industry also pointed out that while there was currently no shortage of funding, there was a shortage of viable projects that could be co-financed with private capital.

ASISA representatives communicated that Government needed to provide consent for joint work to begin on asset types that could be co-financed with private capital such as water purification plants, power plants, transport infrastructure, broadband capacity and health care infrastructure.

A number of other enablers for direct investment by the private sector were raised, which can hopefully be addressed ahead of the Investment Summit.

ASISA and its members believe that the current proposed change in tax policy for Collective Investment Schemes (CIS) as outlined in the 2018 draft Taxation Laws Amendment Bill (TLAB) will result in a number of harmful and unintended consequences that could impact negatively on savings behaviour and our jurisdictional competitiveness.

Given the potentially serious long-term consequences for investors, the savings and investment industry and the country, the TLAB proposal has been receiving attention at the ASISA Board. On 21 August 2018, ASISA Deputy Chairman Thabo Khojane presented ASISA’s concerns to Parliament’s Standing Committee on Finance (SCoF) during public hearings on the draft Taxation Laws Amendment Bill.

ASISA’s key concerns can be summarised as follows:

• Local CIS portfolios could become far less attractive for discretionary savings.
• A penal tax designed to discourage trading within a CIS portfolio is unfair as it conflicts the duty of the manager, which is to evaluate investments purely on merit.
• The liquidity of financial markets could be impacted as the introduction of a higher tax for capital gains made within 12 months could introduce a ‘lock-in’ effect and distort prices. 

In our submission to Parliament, we requested that the amendment to Section 25BA of the Income Tax Act be withdrawn, while we work with the authorities to investigate ways to address frequent transactions in CIS portfolios.  We proposed that a technical committee consisting of National Treasury, SARS, the FSCA and ASISA be formed to consider all relevant facts and make proposals to the policy maker. 

We believe that there are targeted interventions that would not have unintended consequences and would not create unnecessary risk for what has become one of the most established savings vehicles in the world.

During August, ASISA arranged two workshops where members could discuss the Financial Sector Conduct Authority (FSCA) Discussion Document on Investment Related Matters released in June. Compiling the comprehensive ASISA submission in response to the issues raised and sometimes complex solutions proposed by the FSCA involved a significant amount of work by members.

On 31 August 2018, ASISA submitted members’ comments on the Draft FAIS Exemption of Services under Supervision in response to the FSCA invitation received on 2 August 2018.

TVET Saver Waya Waya Financial Literacy Programme

At the beginning of August, the ASISA Foundation hosted the third awards ceremony this year for students who had successfully completed five weeks of the Saver Waya Waya Financial Literacy Programme for Technical and Vocational Education and Training (TVET) Colleges.

Delivered by the Foundation in collaboration with the Absa Group, the programme is specifically designed for final year students in disadvantaged communities with the aim of preparing them for the job market and managing their money once they start earning an income.

On conclusion of the programmes, the awards ceremonies showcase the students’ drama pieces, which they put together following the financial literacy and soft skills workshops to demonstrate their understanding of the learning materials.

One of the highlights of the Saver Waya Waya Financial Literacy Programmes is the enthusiasm with which the young adults share their newly acquired financial skills and work readiness tips with their peers.

The three TVET Programmes already presented this year have reached some 1 000 students. Two more programmes were recently rolled out to students at the Sebokeng TVET campus and the Orbit Brits TVET campus.

Western Cape Secondary Housing and Development Co-operative

The Foundation piloted a financial literacy workshop for leaders of the Western Cape Secondary Housing and Development Co-operative, which consists of community members from areas including Parkwood, Retreat, Grassy Park and Mitchells Plain.

The pilot represents the beginning of a financial literacy campaign for co-operatives to be implemented in collaboration with the South African Housing Co-operative Association (SAHCA).

The ASISA Academy recently welcomed the Nelson Mandela University (NMU) as its sixth university partner. Together with the University of Johannesburg (UJ), the University of the Western Cape (UWC) and the University of KwaZulu Natal (UKZN), NMU now partners with the Academy on the Independent Financial Advisor (IFA) internship programme.

The Academy’s longest standing university partnership was formed in 2011 with TSiBA Education. This dynamic partnership exists to identify and attract students who have what it takes to build a career in our industry through the IMACS@TSiBA programme. Since the start of the TSiBA partnership at least 85% of the graduates have been permanently employed following their five-month internships. 

A very strong partnership is also in place with the University of Cape Town (UCT). The Academy delivers four UCT endorsed programmes.

In addition, the Academy also partners with the University of Johannesburg (UJ) on the CIS@UJ programme, which provides B.Comm (Investment Management) graduates from UJ with the opportunity to participate in a specialist internship programme that will prepare them for formal employment in the CIS industry.

Kind regards