GIPF, mainstay of financial sector
By Hilary Mare
OVER the last 30 years, the GIPF has been the mainstay for the financial industry with assets making up at least 70% of the pension fund industry allowing the GIPF to become instrumental in the formation of the asset management and the stockbroking industry, Finance Minister, Calle Schlettwein has said.
Marking the 30th anniversary of the Fund, Schlettwein explained that Fund has created opportunities for asset managers to set up offices in Namibia and to employ Namibians.
“The Government is mindful that the Fund is the biggest investor in Namibia through listed and unlisted assets to the value of over N$45 billion. Through contributions from members and investment performance, and as alluded to earlier, the GIPF assets now stand at N$119 billion and are invested in accordance with Regulation 13 of the Pension Funds Act. This is truly commendable,” he said adding that its asset base of N$119 billion equivalent to 61.7 percent of GDP, and in particular, the quantum of capital invested locally is a major source of liquidity in the domestic capital market.
Among others, GIPF investments inflows in infrastructure, real estates, energy and housing sectors have created significant local value and jobs.
Schlettwein noted that, it is comforting to know that the GIPF aspires at all times to ensure that it invests locally in compliance with local asset requirements, where it has moved the floor for local investments from a previous minimum of 35 percent, to a targeted level of 45 percent.
“This initiative is driven by the Fund’s commitment to invest more of the contractual savings locally to spur economic activity in Namibia. In essence, the Fund is a safety net for Namibians, second to the Government of the Republic of Namibia. The 30 percent reserve that the Fund has accumulated over its normal assets provides the much needed comfort and assurance to the Government that your affairs are run prudently.
“The GIPF further stands applauded for having embarked upon an incubation programme for local asset managers. The Fund committed N$3.5 billion to six local managers that met the criteria as set forth in its request for proposals. You may think of these as some of the many children of the fund, and the strong commitment to invest at home to deepen the financial market participation in Namibia. This initiative talks directly to the Financial Services Charter objectives and is a targeted programme to ensure that our own businesses are able to fill any void in the industry. Our reliance on South African and International asset managers must, therefore, be reviewed once we are satisfied that we have created the necessary capacity here in Namibia,” further explained the Minister.
Over the past 13 years, GIPF has affirmed and implemented a Liability Driven Investing (LDI) strategy that is informed by a robust Asset Liability Modelling (ALM) process, which underpins the blue-print for its investment strategy.
To this end, Schlettwein also highlighted some of the Funds key milestones.
“GIPF has insourced some of its asset management activities through the creation of an internal treasury department which manages bonds over N$ 12 billion, consistently increased pension benefits in line with inflation annually since 2008, ensuring that the pensioners benefits are not eroded by inflation, containing its administration expenses within 1.4% of contribution for the past 7 years, this is despite actual expenses increasingly annually in line with inflation, grew Fund assets from N$844 million in 1990 to its current status of N$119 billion in 2019 and the Fund’s forecasts to pay out N$ 5,2 billion in benefits and monthly annuities during the 2019/20 financial year ,” he said.