By Gwinyai Taruvinga
The Public Investment Corporation (PIC) is an asset-management firm owned by the South African government. One of the main purposes of the PIC is to support sectors that focus on social security – an important aspect of governance in South Africa. Some of the entities that are clients of the PIC include the Unemployment Insurance Fund and the Compensation Commissioner Fund.
One of the mandates of the PIC is to generate financial returns for its clients and invest in other parts of the continent and beyond. The PIC also supports the UN Sustainable Development Goals and considers issues relating to the environment, social issues and governance to be of paramount importance.
Recently, Dr Aaron Motsoaledi, the minister of Health, suggested that the PIC could play an important role in financing the country’s public health sector. One of the key points the minister made concerned the PIC’s capacity to fund the public in the same way it funds the private sector.
Due to the nature of the PIC, it is believed that the institution has access to trillions of rand that could greatly benefit the funding of not only the public sector health system but also the National Health Insurance (NHI).
When President Cyril Ramaphosa signed the NHI Bill on May 15, 2024, there were mixed reactions. While many believed that this was a positive move in assisting the less privileged sectors of the country, others had concerns about how the bill would be funded. In addition to funding the bill, some sectors of society were concerned about the governance aspect of the bill, considering the country’s recent track record with corruption.
In contrast to countries like the United Arab Emirates, Norway and Canada, South Africa does not have a sovereign wealth fund – a fund that countries maintain from the proceeds of natural resources to invest in initiatives like the NHI or provide aid to vulnerable citizens in times of crises, such as the Covid-19 pandemic witnessed in 2020. More importantly, the countries offer lessons for South Africa on potential ways to create revenue for development projects.
One could argue that within South Africa's context, the PIC is one of the entities that can be compared to a sovereign wealth fund. This means that the PIC could play a role in funding initiatives like the NHI, as well as other development projects in the country.
According to the PIC Annual Report of 2022, the institution was able to grow its assets base (AuM) by 8.9% to R2.548 trillion for 2021/22. The figure is significant, considering that Motsoaledi stated that the government required R10 billion to build new hospitals, suggesting that the PIC could be an important driver of this initiative.
Other than the health sector, several aspects of South Africa require financial injection, such as rehabilitating water infrastructure. The PIC can also play an important role, as its mandate is closely linked to the UN’s Sustainable Development Goals, specifically environment, social and governance. This can result in investments in the relevant sectors that are crucial to South Africa’s economic development.
The PIC has shown its ability to fund meaningful projects that could serve as a blueprint for other sectors of the economy. One such project the PIC funded was for R281m on behalf of the Government Employees Pension Fund for the construction of the Roggeveld Wind Farm in Matjesfontein on the Northern Cape and the Western Cape border. At the peak of this project, 851 jobs were created, and the project is believed to be generating 613GWh of electricity, which could benefit 49,000 households.
A PIC investee company, the Lona Group, was able to open a cold storage and packing facility in Gqeberha, Eastern Cape. The facility is 16 ,000m² and packs fruit for the export and local markets. The automated fruit-packing equipment is advanced, aiding in the production process. This is a R500m public-private partnership that includes actors such as the Department of Trade, Industry and Competition.
Another impactful project that PIC ventured into was with Alzu Agri, an agricultural business founded in 1968. The PIC acquired 30% of the Alzu equity in 2019, and this was seen as a way of uplifting the community. The investment would also support the growth of the company and the creation of jobs for the community.
The PIC has proved to have successful ventures that can be replicated in South Africa. While the institution has been successful in assisting communities, the sums of money at its disposal could go a long way in boosting sectors such as the health sector. More importantly, through methodical planning and adherence to corporate governance procedures, the PIC could be instrumental in funding the NHI and ensuring its benefits reach the sectors of the country that would benefit from it.
* Gwinyai Taruvinga is a policy analyst and post-doctoral Research Fellow at the Wits Global Change Institute.
** The views expressed in this article do not necessarily reflect the views of IOL or Independent Media.