Speaker 0:
Joining me Now at the Bat Winter Conference. Musa Masa, principal executive officer at the Government Employees Pension Fund. Good to be having you.

Speaker 1:
Thank you for having me

Speaker 0:
so Winter Conference Annual conference convention Of all the largest asset owners in the South African pension fund industry, what does

Speaker 0:
the GP, as the largest pension fund in Africa, look to take away from the beta conference each year?

Speaker 1:
So this is a very valuable conference, the gathering of retirement funds in South Africa. It has managed to gather close to 800 delegates, if not more so. We believe the collaboration between the retirement funds that have gathered here

Speaker 1:
over the next two days it is beneficial for the industry as a whole. But the GP F also gets to learn, as well as share its insights on what's happening in the industry as well as what is taking place in the future.

Speaker 0:
So the deputy president gave quite a nice welcome and a very positive welcome this morning. What did you take away from his opening

Speaker 1:
address? I think the positive message coming from the presidency here around the government's willingness to open up channels with pension funds with business to make it easy for investors allocators of capital to bring in their capital to assist with economic recovery and economic development.

Speaker 1:
Um, fast tracking engagements between pension funds because they understand the importance of pension funds investing in in in the economy. So it's welcome that we are recognised as pension funds, the role that we play,

Speaker 1:
as well as an enabling environment that we require for us to attract other investors from Europe and the US as well as the East, to the extent that those pension funds are willing to invest alongside the likes of the GP and other funds in South Africa. So we welcome that willingness from the presidency as articulated by the deputy president.

Speaker 0:
The GPF follows a developmental agenda. How does

Speaker 0:
this translate or relate to climate change, sustainable investing as well as responsible investing in the context of South Africa as a unique country?

Speaker 1:
So I think the two key indicators for US responsible investment and there you link that to the sustainable development goals of the United Nations, the principles but most importantly for US impact, making an impact to the investments that

Speaker 1:
we make at the GP F and this is through direct investments that we hold in the alternative space, but as well as investments in infrastructure and infrastructure cuts across energy infrastructure, we currently have an energy crisis in the country. To what extent does the GP F play a role in the just transition space so that we invest in renewables, make an impact in the economy, make an impact in the lives of our members and other citizens in the country,

Speaker 1:
but still derive a return? We are currently seeing a few challenges with our water infrastructure as well. How do we intervene in such spaces in a responsible manner? Derive the returns that we require but at the same time also assist the country with some of its infrastructure challenges?

Speaker 0:
Absolutely so following this transition path toward a net zero future, how do we as pension fund managers, principal officers of pension fund

Speaker 0:
of large pension funds, ensure that the unemployment crisis within the country is not exacerbated but still moving to a net zero

Speaker 1:
future? So we need to be realistic about the circumstances. So when we assess the industries that need to transition away from fossil fuels, we need to understand the impact to those communities to the livelihoods and the people who need to be

Speaker 1:
repurposed so that they can start earning different livelihoods. So we need to be responsible and realistic about what that means. The context of South Africa is different from other jurisdictions, so we need to appreciate that first. One of the things that we believe in as the GP is if we can't directly exit an investment because of other considerations, then let's have an engagement. So that engagement versus divesting we need to have that

Speaker 1:
conversation and find alternatives for us to remain active in the economy through our investment. So we can make an impact but not disrupt the lives of people, but also make an impact in line with our E S G principles and our role as responsible investors.

Speaker 0:
So GP F, as a long term investor, allocates to long term projects, infrastructure projects as well as private equity.

Speaker 0:
Now, with the two pot system possibly coming into the mix, how is this going to impact your liquidity planning?

Speaker 1:
Well, to the extent that the withdrawal at the moment, we don't know for sure how much will be allowed as instant access by members. But if it's a minimal amount, we don't see liquidity challenges for the fund of our size. Obviously, it will require us to alter our investment strategies for us to access that liquidity. It's not readily available, but if it is a huge sum of money, it does change the way the GP f will need to invest into the future.

Speaker 1:
Our strategy will change. It will also change the long term term nature of our investing because we need to hold more liquid assets in order for us to be able to pay out whenever it is required. But it should stabilise as once the legislation has been implemented at the time that it's implemented because then the two parts will then allow for liquidity for the part that is flexible and then the preservation on the larger portion will definitely be guaranteed. So your strategy will most likely be split

Speaker 1:
to ensure you can cater for the flexible portion and then the long dated portion that is forced preservation. You can then have long dated investments that can sustain or withstand any shocks, and that's where infrastructure investments can continue to play a role in our investment strategies. Thank

Speaker 0:
you for breaking that down for us. So just to close off the session now, what is your outlook from this particular Windsor Windsor Conference compared to last year's Windsor conference? What is your outlook going forward? I think

Speaker 1:
there's a lot of discussions

Speaker 1:
and and and action being being spoken of around climate change, uh, the just transition e s G, uh, transformation and and how pension funds or retirement funds as a whole should be working together for me, The collaboration part. I think that's what bait has been doing over the last two years is how do we collaborate the value that retirement funds can play together because as a collective, we can play a better advocacy role than if we all operate as

Speaker 1:
individual retirement funds. So the collaboration and and the appreciation that, uh, working together as a an industry is much better than each fund trying to push its own agenda because we all have the same challenges. So there is that appreciation that we all need to work together because we have the same goals. Ultimately, which is to preserve retirement savings of our members, generate returns, but also make an impact in the process.

Speaker 0:
On that positive note, Musa, I want to thank you very much for your insight. We appreciate your time.

Speaker 1:
Thank you very much.