Pension funds can benefit from funding impact/infrastructure projects

Windhoek: Investment opportunities for long-term investors abound as governments around the world look to private funding to contribute to economic and social infrastructure, as well as other developmental investments.

In Namibia, there are infrastructure projects requiring funding of more than N$200 billion as per the NDP4 in the fields of energy, transport, water and telecommunications.

Speaking at a recent conference in Windhoek of the Institute for Retirement Funds Namibia (IRFN), Mark van Wyk, Head of Impact Investing at Mergence, said pension funds are ideally positioned to provide funding to developmental projects.

“The Namibian government has created an enabling legislative framework through Regulation 29 of the Pensions Fund Act, which allows pension funds to allocate a minimum of 1.75 percent and a maximum of 3.5 percent of the market value of their investments locally in unlisted entities,” said Van Wyk.

“In addition, there is growing interest by investors in asset classes that can generate stable performance, while still producing desirable yields given the continuing volatile macro-economic backdrop and record low real yields for safe assets,” added Van Wyk.

He remarked that Mergence believes impact and infrastructure investments can be a long-term strategic component of a fund’s asset portfolio. The benefits of adding infrastructure to an investment portfolio include diversification, attractive long-term returns, stable cash flows, inflation protection, risk/return benefits and low sensitivity to gross domestic product.

Mergence Unlisted Investment Managers (Namibia) recently launched the Mergence Namibia Infrastructure Fund Trust, a Namfisa approved special purpose vehicle, which will invest via unlisted investments in carefully selected impact and infrastructure projects in Namibia.