President Cyril Ramaphosa has acknowledged that pension funds and other asset managers have not taken the opportunity to invest in public infrastructure because of the government’s past track record of poor project planning — but he says this is about to change for the better.

Ramaphosa was replying orally to questions in parliament on Tuesday afternoon.

The plenary session came after finance minister Enoch Godongwana amended regulation 28 of the Pension Funds Act in 2022 to “externalise savings” of South Africa’s collective investment schemes industry in other markets.

ANC MP Mdumiseni Ntuli asked the president in his state of the nation address for a commitment to infrastructure development to enhance economic growth and how he intended to leverage the balance sheet of the republic to direct surpluses in the financial sector to support industrialisation.

“For SA to achieve the levels of economic growth it needs, it is essential that government and business work together to scale up investment in infrastructure. This includes undertaking structural reforms to remove the binding constraints of energy supply and inefficient freight and logistics,” Ramaphosa replied.

Ramaphosa said that in the coming years, infrastructure spending by the government will encourage and enable greater private sector investment in the network industries, including electricity, rail and water.

He said regulation 28 and announcements in Godongwana’s budget speech on Wednesday will further incentivise institutional investors.

“I do believe that details of these mechanisms will be published and better articulated by the minister as he presents the budget. All this is happening to facilitate greater investment in infrastructure and to mobilise private and public resources to speed up investment in our infrastructure.”

Ntuli asked Ramaphosa why the pension funds in South Africa have not taken advantage of the regulation 28 amendment to invest more in infrastructure, and what was required to attract pension funds to invest more.

Ramaphosa said the key weakness for SA was that while the government worked diligently to invest in infrastructure, capacity at a national and provincial level needed to be strengthened to prepare for the required implementation.

“There hasn’t been much take up. In many ways, there are a number of impediments and one of them is the project preparation process. Because in order for projects to be properly funded, they need to be presented as bankable and sufficiently processed so as to be the type of projects that will be executed within budget, within the time frame and properly presented to their own committees.

“In part, the mistake and the fault has been on our side. And now that the regulations clearly articulate this — and the minister of finance will speak more about it when he presents his budget — we have now identified much clearer funding instruments and funding vehicles. But at the same time, project preparation really becomes the key.”

Ramaphosa said more projects will be prepared for investment.

DA MP Wendy Alexander asked Ramaphosa if “taking from the public and referring to it as leveraging the balance sheet of the state to cover for the mistakes of the past” is a sound approach.

“In the investment world, when you attract people to invest, you are essentially using other people’s money, but that money must be used for the purpose for which it is meant. It cannot be that you call for investment and ... you then use the money for other purposes,” Ramaphosa replied.

Ramaphosa told Alexander that as investors bring funding for infrastructure, project preparation will ensure that money put aside for funding will be appropriately used.