Nathalie Burrows, Editor at EBnet
In a venue synonymous with high stakes gambling, the retirement fund industry gathered to remind itself that the real game of chance lies not on the casino floor, but in the investment decisions that will determine the financial futures of millions of South Africans. The Batseta Winter Conference opened in Sun City with a theme that was at once deceptively simple and profoundly instructive: The Power of One Degree. Whether you interpret that as a single degree of temperature change — enough to tip a climate system — or a one-degree course correction on a ship — enough to land you on a completely different continent — the message was clear. Small, deliberate shifts, made with urgency and conviction, can produce seismic outcomes.
The Finance Minister set the scene
The highlight of the opening day was Finance Minister Enoch Godongwana, who delivered a keynote that was equal parts candid, challenging and inviting. He opened with the simple statement: South Africa and the global economy face severe challenges. Global growth has slipped to 3.1%, a figure that cannot be shrugged off. “We can’t be paralysed,” he told delegates. “We must move with urgency and scale.”
His central argument was infrastructure – and not as an abstract policy ambition, but as a foundational economic imperative. Rail, water and digital infrastructure must be built by mobilising and deploying Africa’s assets. On water alone, the need is staggering: R400 billion is needed. The minister was emphatic: “Infrastructure investing is not optional – it’s foundational.”
Godongwana’s rhetorical question of whether it a mistake to allow 45% of South African retirement funds assets to be invested offshore was perhaps cheeky and playful (he is a very engaging speaker) but did actually stop my train of thought on its mental tracks. Perhaps, as he suggested, some of that capital should have remained here to build the country. It’s an academic discussion that sits uncomfortably alongside the very real benefits of diversification, but demands an honest response from stewards of capital.
Crucially, he acknowledged that the political will exists, but the investment instruments may not yet be fit for purpose, which he committed to resolving as a priority. Legislation, public-private partnerships and a conducive regulatory environment are the three pillars required. He closed with an invitation that resonated across the room: “Let’s play together” – a call for continental collaboration and collective ownership of South Africa’s development story.
David and Goliath in the boardroom
One of the standout breakaway sessions brought together four CEOs for a frank conversation on where retirement funds are leaving returns on the table. The discussion centred on a David and Goliath dynamic: established asset managers versus emerging managers – and it was here that this Editor encountered the term “closet indexing” for the first time.
When every retirement fund channels capital into the same handful of giant asset managers — all competing in a shrinking universe of listed shares — performance inevitably trends toward benchmark. Emerging managers, argued the panel from Motswedi Economic Transformation Specialists, Differential Capital, Ensemble Capital, MSM Property Fund and Volantis Capital, are nimbler and more responsive. The returns bear this out, substantiated by published research – check out Motswedi’s research paper on EBnet’s Publication Podium. Their message was unequivocal: emergence does not equal inexperience.
When the audience was polled on why funds haven’t allocated more to emerging managers, 44% cited concern about business or operational risk. But the 24% whose investment consultant simply hadn’t recommended them gave perhaps the more telling answer – and the more actionable one. Trustees and decision-makers must actively raise these options with their appointed service providers. The call to action from the panel was refreshingly direct: Just start.
Why aren’t Africans investing in Africa?
In the plenary session that best embodied the conference theme, representatives from the EPPF, National Fund for Municipal Workers, Development Bank of Southern Africa and Momentum Multi-Manager tackled a question that should unsettle every pension fund board: Why is investment in Africa not made by Africans?
The challenges are real: currency risk, cultural differences, the continent’s inherent disparateness, and uncertain exit conditions. But the solutions are within reach: policy and political certainty, predictable cashflow streams, early-stage structuring involvement, bankable projects and a pooling platform to enable smaller funds to participate in large infrastructure deals.
My goosebumps moment …
The day ended on a note of genuine inspiration. Two entrepreneurs — from Ozow and Retail Capital — reminded the room that capital deployment need not be massive to be transformative. An R50 million investment, at the right moment, can be the catalyst for enormous growth and meaningful job creation. It was a fitting close to a day that proved, beyond doubt, that in pension fund investing – just like in the casino next door – it’s not always the biggest bet that wins. Sometimes, it’s knowing exactly where to place it.
Looking forward to Day 2!
ENDS
