| Summary: | Thesis (MBA)--Stellenbosch University, 2012. === Asset restrictions are prudential regulations applied by regulators around the globe. In essence,
they prescribe asset restrictions as a risk-control measure to establish appropriate capital
requirements for regulated institutions. The aim of prudential regulations and standards is to
protect consumers who acquire the products and services offered by these institutions. Pension
funds in Namibia must comply with Regulation 28 of the Pension Funds Act, 1956. Regulation 28 is
the prudential regulation that governs investment limits for pension funds. The regulation
prescribes maximum investment limits for all asset classes. In 2009, the government made a policy
decision to amend Regulation 28 to prescribe a minimum investment in unlisted shares (private
equity) that would be applicable to pension funds, long-term insurance companies and unit trusts.
The objective of government is to use Regulation 28 as a macroeconomic tool to control capital
flows and channel capital to domestic companies. The regulation will stimulate economic activities,
local ownership, create employment and reduce poverty, which will eventually facilitate economic
development. In addition, this objective has the potential to assist the development of the private
equity sector in Namibia. The implication of this development is that retirement savings will be
utilised to achieve macroeconomic objectives and develop an industry sector. Private equity has
shown tremendous growth in developed economies and is beginning to grow in Africa as well.
Private equity is a sector that has the potential to realise excellent returns for pension funds,
provided the risks are adequately controlled and managed.
The study proposes a regulatory framework for unlisted investments (private equity) by pension
funds. The framework considers risks and proposes how to best manage and control them. The
conclusion is to abolish a prescribed minimum and to increase the domestic asset requirement.
Ultimately, regulators exist to protect consumers while the development of markets is a secondary
priority.
|
|---|
