African pension funds see low returns in limited cross-border investment
Pension schemes are finding it difficult to make cross-border investments due to political interference, a Pan-African forum was told in Nairobi last week.
Subsequently pension funds hold billions of shillings in unattractive government-linked ventures, thereby denying members higher returns as well as the opportunity to profitably contribute to development.
The forum heard that most pension fund trustees are subject to political sway thus making it difficult to innovate new products or investments. Cross-border investments are often considered unpatriotic.
The Making Finance Work for Africa (MFW4A) forum coordinator David Ashiagbor said there was need for a review of the policy framework to facilitate an alternative investment regime for pension funds.
“While the laws allow cross-border investments, none of the pension funds can risk taking the bold move to use pension funds in a neighbouring country since it is deemed unpatriotic. This has seen them hold large deposits of money in low-interest products away from high earning streams like infrastructure projects,” he said.
Full Content: Daily Nation
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