Government Institutions Pension Fund (GIPF), through its newly established Internal Treasury Unit, has invested in excess of N$8 billion in Government paper, Board of Trustees Chairman, Goms Menette, said this week.
The revelation by Menette comes as analysts have said that demand for new Government debt has virtually dried up over the past two years.
The Windhoek Observer reported in October last year that Government continues to struggle to secure takers for its debt instruments, with a bond auction held at the time managing to raise only N$3,25 million from the N$160 million sought.
In another auction held in September to raise N$2 billion, GIPF is said to have taken up more than 90 percent of the debt while other investors stayed away.
Menette said a further N$5,9 billion in assets were swapped with the Bank of Namibia to support the international reserves of the country. He added that further sales of this portfolio will over time be invested in local Government instruments.
Analysts have previously warned of GIPF’s increased exposure to Government securities, which have been shunned by other investors including commercial banks.
Economist Rowland Brown recently told the Windhoek Observer that the rapid increases in the debt stock, with an effective doubling of outstanding debt over the past two years, has firstly outpaced the growth in assets looking for a home, and secondly has made many of the conventional buyers of Government debt cautious, when it comes to increasing their holdings.
Namibia Equity Brokers Head of Research, Alfred Kamupingene, has also previously opined that concerns over the proposed National Equitable Economic Empowerment Framework (NEEEF) and the decision by ratings agency, Fitch, to revise Namibia’s outlook from stable to negative were some of the factors impacting on investor appetite for the Government issued paper.
“The confluence of these two factors is now manifesting themselves in investors either through undersubscribing to the sovereigns or asking huge premia in order for them to touch the sovereigns,” he said.
Speaking during GIPF’s annual stakeholders’ consultative meeting held in Windhoek on Tuesday, Menette said as at end of March 2017, the Fund’s total asset value stood at N$99,5 billion, after recording an annual return of 5,84 percent against the benchmark of 4,59 percent.
Of these assets, 49,15 percent were invested in Namibia; 26,29 percent on the international market, while 18,08 percent were in South Africa and 6,48 percent invested in the rest of Africa.
In terms of asset class, at least 56,8 percent of total assets were invested in equities, 22,82 percent in fixed interest assets, 15,17 percent in property and 2,55 percent in private equity.
Other asset classes comprised of cash (2,08 percent) and derivatives (0,04 percent).
Menette said GIPF, through First Capital Real Estate Finance Fund, had received N$1 billion, which had been fully invested and had assisted close to 2,000 members by providing finance to acquire houses.
The Fund also assisted in the construction of 735 general and single residential housing units across the country. In addition, the Fund recently approved the servicing of 327 single residential plots and the construction of 180 housing units in the affordable housing segment.
Windhoek has the highest number of houses constructed to date at 318, Otjiwarongo 69, Okahandja 65, Ongwediva 52, Otavi 48, Keetmanshoop 40, Arandis 33, Rundu 20, Eenhana 15, Tsumeb 14 and only one in Swakopmund.
At least 2,142 plots comprising of plots for houses, townhouses and flats targeting low- to middle-income households have also been serviced to date in Windhoek, Otjiwarongo, Okahandja, Ongwediva, Keetmanshoop, Arandis, Rundu, Otavi, Eenhana, Tsumeb, Swakopmund, Osona, Walvis Bay, Ondangwa, Outapi and Omuthiya
A further N$300 million was availed for the purposes of land servicing. To date, the Fund has serviced 391 stands at a selling price of N$120,000.
Menette said GIPF had further committed N$2 billion to a second round of fund managers with unlisted mandates in the areas of venture capital, debt funds, infrastructure funds and general private equity.