Absa Group CEO Highlights Five Priority Sectors for Pension Funds Investment to Drive Long-Term Growth
Kenny Fihla has called for a fundamental rethink of pension fund investment strategies across Africa, cautioning that existing frameworks are limiting the continent’s economic growth prospects.
According to the Absa Group Chief Executive Officer, current pension fund models, while designed to preserve capital and meet long-term obligations, are overly restrictive and ultimately constrain the deployment of capital into productive sectors of African economies.
Speaking in an interview on Channel One TV, Mr. Fihla noted that a significant portion of pension fund assets are either subject to rigid investment guidelines or channelled into offshore instruments, thereby reducing the availability of long-term capital needed to drive domestic economic expansion.
“Some of the pension fund investment policies actually mitigate against the capital being deployed in the right sectors. Many of these policies restrict where the money can be deployed and secondly make a requirement for a significant portion of these savings to be deployed in investments that are outside of African continent,” he stated.
He argued that while capital preservation remains critical, the current approach fails to optimise returns and undermines opportunities to support sectors with strong growth and value-creation potential.
To address this, Mr. Fihla outlined five key areas pension funds should prioritise to support sustainable economic development across the continent.
He identified infrastructure development as a critical area, stressing the need not only to finance projects but also to unlock broader economic activity linked to such investments.
On logistics, he emphasised the importance of building efficient and reliable supply chains, noting that improved connectivity would significantly enhance trade and industrial productivity.
Mr. Fihla also pointed to the mining sector, particularly the need to invest in value addition and processing of critical minerals, as a strategic opportunity for African economies.
Additionally, he highlighted port operations as an area of potential growth, indicating that African ports could capitalise on ongoing global supply chain disruptions, including geopolitical tensions in the Middle East.
He further underscored the importance of investing in high-tech industries, including artificial intelligence and data infrastructure, to position Africa to benefit from emerging global technological trends.
According to him, aligning pension fund policies to support investments in these priority sectors would not only improve returns but also play a pivotal role in unlocking long-term economic growth across the continent.
