“The collective capital present at the PIAFRICA Conference is close to $50 billion”

The Pension Funds and Alternative Investments Africa Conference (PIAFRICA), now in its 7^th edition, has emerged as a crucial platform for discussing the role of pension funds on the continent. Despite initial challenges posed by COVID, the conference has successfully evolved over seven years, actively convening for five, with a focus on Mauritius as an ideal location. The increasing participation, from under 100 to nearly 200 attendees, showcases the remarkable diversity among pension funds across the continent. Collaborative efforts among African pension funds, including cross-border investments, are anticipated to set industry precedents. To ensure progress, continuous refinement in regulatory frameworks and human capital enhancement is crucial. Mahad Ahmed, the Managing Director of AMETrade, emphasises the collective importance of African pension funds in alternative investments, encouraging exploration of similar opportunities. For him, the conference highlighted a substantial savings pool in Africa, with an estimated collective capital of close to $50 billion represented at the conference, showing potential for future expansion and collaboration.

This year marks the 7^th edition of the Pension Funds and Alternative Investments Africa Conference. What motivated you in organising the conference here, in Mauritius, for the seventh time?

Over the past seven years, our conference has evolved significantly. Notably, two of those years were affected by the global challenges posed by COVID, necessitating a shift to virtual platforms. Technically, we’ve actively convened for five years, fostering valuable discussions on the role of pension funds. Mauritius has proven to be an excellent hub, serving as a pivotal bridge for capital flowing into Africa. The local infrastructure is robust, complemented by a pool of highly qualified and competent human capital. This has led us to believe that Mauritius is the ideal locale for our conference. Our focus remains on facilitating networking opportunities, fostering knowledge exchange among diverse pension funds, and delving into the tangible impact of their investments on the real economy. We are genuinely enthused about the ongoing program, and heartened to welcome new pension funds participating in this conference for the first time.

Tell us about the progress you’ve seen from the first edition to the present one.

The progress has been truly remarkable. In our inaugural edition, we had fewer than 100 attendees in total. Fast forward to the present, and we are now approaching, if not surpassing, 200 participants. What stands out the most is the remarkable diversity among the pension funds represented, hailing from various corners of Africa. We have seen participation from West Africa, including Côte d’Ivoire, Nigeria, Ghana, and Senegal, as well as from the South, with representatives from South Africa, Zimbabwe, and Zambia, and extending to the East with attendees from Kenya and Rwanda, among others. This diversification is not limited to public pension funds; we’re also witnessing the active involvement of private pension funds, both locally in Mauritius and from numerous other jurisdictions across the African continent.

Could you provide some context about the process of selecting this year’s themes?

The selection of our conference theme consistently aligns with prevailing trends and the current global and regional environment. We maintain a keen awareness of the dynamics shaping the industry, drawing insights from both global and local perspectives. Our advisory board, comprising representatives from pension funds in Mauritius, South Africa, and various other regions, plays a crucial role. Through consultation sessions, we delve into the primary driving forces, ensuring that the chosen theme resonates with the key advantages inherent to Africa. It is our steadfast commitment to spotlight these strengths during the conference, fostering a meaningful dialogue that underscores the unique opportunities and potential within the African pension fund landscape.

What are the main takeaways from these two days? 

The paramount insight derived from our discussions underscores the enduring significance of alternative asset classes, particularly private equity and infrastructure, within the investment landscape for pension funds. It is increasingly evident that these alternatives offer a viable and attractive avenue for investment, prompting a growing allocation from pension funds. There has been a noticeable shift in the trend, as regulations governing offshore allocations evolve, allowing pension funds to increase their investment percentages in alternative assets annually. This change reflects a heightened willingness among asset owners on the continent to deploy capital into alternatives, thereby generating substantial economic impact. 

Despite prevailing high interest rates across the African continent, the private equity space stands out as a domain rich with promising opportunities. Concurrently, a focus on capacity building and training has elevated understanding regarding the transformative role of technology in enhancing operational safety and transparency for pension funds. This showcase of technological advancements has sparked a realisation of the diverse asset classes and their tangible economic impact. The outcomes are not only marked by increased awareness, but also a resolute commitment to reconvene next year, fostering an ongoing dialogue on the progress made thus far.

What steps should Africa take to advance from its current position in the pension, investment, and insurance sectors?

There is a notable and concentrated effort to integrate the informal sector into the pension system, with a significant reliance on technology to facilitate this transition. A noteworthy trend is the collaborative pooling of resources by pension funds. Instead of confining their capital within their home jurisdictions, such as Mauritius, Ghana, or South Africa, pension funds are increasingly exploring cross-border opportunities. This theme of cross-border investments is anticipated to persist, with African stakeholders, particularly pension funds, taking a leading role. The proactive engagement of African pension funds is expected to set the precedent, attracting follow-on interest and investment from the broader international capital landscape.

Are there areas where we need to progress? 

Continuous progress and improvement are imperative in the dynamic landscape of pension funds. Regulation, a crucial aspect, remains in a state of flux, necessitating ongoing adjustments. Anticipated changes in regulatory frameworks present an avenue for improvement. Furthermore, the enhancement of human capital within each country is pivotal, particularly in areas like investment evaluation and fiduciary services. As the foundational human capital evolves and strengthens, improvements in these domains can be expected. Despite the need for refinement in certain areas, the overarching objective is to foster greater collaboration among pension funds. The conference serves as a platform to advocate for increased unity, emphasising the collective impact that can be achieved by pooling resources. Encouraging pension funds to work collectively is seen as a key strategy for driving positive change and amplifying their influence within the financial landscape.

With the frequency of weather changes and the prevalent climate challenges across Africa, the need to deploy capital for resilient infrastructure becomes increasingly paramount

Following the COVID period, new themes have emerged, centred on climate-related issues and technological advancements. How do the insurance, pension, and investment sectors adapt in response to these environmental concerns?

Their role is indispensable, given the substantial interest from capital seeking entry into the climate-resilient infrastructure sector. With the frequency of weather changes and the prevalent climate challenges across Africa, the need to deploy capital for resilient infrastructure becomes increasingly paramount. Whether addressing concerns related to floods or heavy rainfall, the availability of both technology and capital creates a significant opportunity. Africa stands at a crucial juncture to attract climate finance and channel it strategically, not only for the benefit of the economy, but also to positively impact the citizens of the countries involved. The convergence of available technologies, capital, and the pressing climate issues positions Africa to seize and effectively utilise this opportunity for the greater good.

How does the rapid evolution of technology, particularly with the emergence of AI, align with the industry?

The demographic dividend of Africa, characterised by a dynamic youth population, has led to a widespread adoption of technology across various sectors. This technological integration has brought about increased efficiency, cost savings, and enhanced transparency, particularly in industries where asset managers allocate investments. The youth’s inclination towards using mobile phones for diverse activities has further accelerated this trend. Technology is poised to play a pivotal role across numerous sectors in Africa, and it is imperative to harness and leverage its potential. A notable aspect is the capital directed specifically at creating and financing technology hubs, supporting fintech initiatives, and empowering developers and programmers. 

This strategic focus aims to enable the youth of Africa to assume critical roles in the technological landscape. An additional noteworthy development is the increasing presence of African talents, including software developers and programmers, on global freelance portals. These individuals, educated in cutting-edge technologies, are contributing to various projects while working remotely from different African countries. In essence, technology emerges as a transformative force, presenting a game-changing opportunity for Africa.

What was the key message from AMETrade for this conference?

Our primary goal was to highlight the collective significance of African pension funds as key stakeholders, and underscore the potential within the alternative investment space. By showcasing that others are actively investing in this domain, we aimed to encourage African pension funds to explore similar opportunities. Our passion drives us, and as a company with a dedicated focus on Africa, we are genuinely thrilled to participate in this forum. The support received from Mauritius has been invaluable, and we express our sincere appreciation for the collaboration and encouragement thus far.

Why do you see Mauritius as a link to all your projects?

Mauritius plays a crucial role as a pivotal link in the deployment of capital and in structuring investments. The region boasts a wealth of skilled labour, and benefits from a robust legal framework that extends across multiple jurisdictions. With agreements in place with various regional blocks both within Africa and globally, Mauritius stands as a hub of competency in facilitating international investments. Given these attributes, Mauritius is poised to continue playing a highly significant role, not only presently, but also in the foreseeable future.

You said that the amount or the sum of investment in the pension fund industry is critical. For the sake of our audience, can you give us an idea of how big it is?

In terms of assets and pension fund size, it’s noteworthy that, without specifying names, a significant pension fund from a regional country represented at this conference manages over $15 billion. The collective capital present at this conference, stemming from pension funds across Africa, is estimated to be close to $50 billion. This impressive figure underscores the substantial savings pool available within the continent, with the potential for further expansion as more pension funds join future conferences. However, it’s crucial to acknowledge the diverse regulatory frameworks in each country, necessitating a respectful approach. Finding mutual cooperation methods and engineering collaborative strategies are essential to ensuring that the deployment of capital benefits both pension funds and the asset managers entrusted with the mandate. The aim is to not only showcase the impact through job creation, but also to attract more participants and resources for such initiatives in the upcoming years.