eThekwini Working Group seeks pension fund investment for Durban's economic growth

The Presidential eThekwini Working Group (PeWG) is focusing on increasing Durban's economy and encouraging pension funds to invest in various municipal projects. The PeWG recently convened with pension funds to present investment opportunities, emphasizing that infrastructure investments are crucial for the growth of these funds' portfolios.

The PeWG's co-chair, Mike Mabuyakhulu, discussed the available opportunities during a meeting with pension funds and other stakeholders. The theme of the meeting was "Unlocking Pension Capital for Bankable Projects in KwaZulu-Natal," and it was attended by various representatives from the institutional investment sector, asset managers, and fund managers.

Mabuyakhulu stated that the primary goal is to align domestic capital structures with the real economy to foster long-term development while providing investors with robust, risk-adjusted financial returns. Across the nation, there is a consensus that economic growth depends on infrastructure investment, enhanced industrial development, and the expansion of productive sectors.

Capital seeking sustainable, long-term investment opportunities is readily available, but the challenge lies in creating the necessary conditions to facilitate this alignment.

South Africa possesses a significant domestic asset in the institutional funds represented in the room, estimated at R2.96 trillion, with a total asset under management of R5.96 trillion. However, there are challenges related to structural, regulatory, and behavioral issues that need to be addressed to encourage pension funds and asset managers to invest in public projects. To tackle these obstacles, both the Presidential eThekwini Working Group and global economic studies have proposed practical solutions.

One major structural solution is the establishment of professionalized, ring-fenced Project Preparation Facilities like the eThekwini Independent Public-Private Partnership Office (IPPPO). The IPPPO is responsible for completing feasibility studies, environmental authorizations, spatial planning, and legal structures before presenting investment opportunities to the market.

This proactive approach allows pension funds to conduct thorough due diligence on mature, bankable assets, ultimately reducing transaction costs and deployment timelines.

The city of eThekwini offers various investment opportunities, including an Independent Power Producer (IPP) energy procurement pathway, water and wastewater infrastructure modernization, urban regeneration and commercial real estate development, and mixed-use urban development in the CBD. Collectively, these catalytic investment opportunities represent approximately R227 billion in potential investment, capable of generating over 300,000 construction jobs and more than 120,000 permanent employment opportunities.