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| Issued September 2024 | ||||
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| In this newsletter... | ||||
| Benchtest 08.2024 – RFS celebrates 25 years, FIMA’s best practice questioned, 11 predictions that came true and more... | ||||
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| IMPORTANT NOTES AND REMINDERS | ||||
NAMFISA levies
The repo rate remains unchanged in September at 7.50%. The interest rate on funds’ direct loans remains at 11.50%. Income Tax Act amended The latest amendments to the Income Tax Act were published in government gazette no 8442 of 16 September 2024. The Deloitte newsletter in this link aptly summarises the amendments. |
Registered service providers Certain pension fund service providers must register with NAMFISA and report to NAMFISA. Download a list of service providers registered as of June 2024, here... Retirement calculator Use our web-based retirement and risk shortfall calculator for your personal retirement planning. Find it here... If you need help with your financial planning, get in touch with
RFS provides comprehensive support for trustees. Please find a list of documents to assist with the governance and management of their private funds here... |
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| IN THIS NEWSLETTER... | ||||
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In this newsletter, we address the following topics:
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In ‘A note from the Managing Director read about
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In 'Legal snippets', read about...
As always, your comment is welcome, so open a new mail and drop us a note! Regards Tilman Friedrich |
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| A NOTE FOM THE MANAGING DIRECTOR | ||||
| Celebrating 25 Years of Excellence: A Milestone Under the Namibian Sky | ||||
| On a beautiful evening under the Namibian sky, RFS Fund Administrators marked a significant milestone — our 25th anniversary — with an open-air reception at the Eagle's Beer Garden in Avis. It was an evening to remember as we gathered with clients, staff, and esteemed guests to celebrate a journey of dedication, growth, and unwavering commitment. As Managing Director, I was privileged to address the attendees and express heartfelt gratitude to everyone who has been part of our success story. Twenty-five years ago, RFS was founded by Tilman Friedrich and Mark Gustafsson with a vision to deliver home-grown expertise to Namibian pension fund clients. After our first five years, a then small venture managing N$1.3 billion for 8,000 members has grown into a thriving business. Today, with 81 employees, we manage N$25 billion in assets for 26,000 members and pensioners of private funds. Our Benchmark Retirement Fund has similarly flourished, now overseeing N$9 billion for around 19,000 members across 140 employer groups. This success is not mine alone; it is a collective achievement. Our loyal clients, trusted partners, and dedicated team have been the backbone of our growth. While challenging, the recent migration to a new fund administration system demonstrated our team's resilience and professionalism, ensuring we remain at the forefront of our industry. During the event, I had the pleasure of introducing the leadership teams of RFS and the Benchmark Retirement Fund. These individuals have played pivotal roles in our journey, and their contributions have been instrumental in our continued success. I also addressed some challenges, particularly the regulatory hurdles imposed by NAMFISA and the SSC's impending introduction of a National Pension Fund. These are significant challenges, but they also present opportunities for us to adapt, innovate, and continue providing exceptional service to our clients. Looking forward, I am filled with optimism. Establishing RFS Financial Advisors is a strategic move that strengthens our service offerings and positions us for future growth. As we celebrate this milestone, we embrace the future with the same passion and commitment that have brought us this far. In conclusion, this evening was not just about reflecting on our past but also about looking ahead. With the trust and support of our clients and the dedication of our team, I am confident that RFS will continue to lead, innovate, and thrive for many years to come. |
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| TILMAN FRIEDRICH'S INDUSTRY FORUM | ||||
| Monthly Review of Portfolio Performance to 31 August 2024 |
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| In August 2024, the average prudential balanced portfolio returned 1.3% (July 2024: 2.0%). The top performer is Investment Solutions Balanced Fund, with 2.10%, while Allan Gray Namibia Balanced Fund, with 0.40%, takes the bottom spot. Momentum Namibia Growth Fund took the top spot for the three months, outperforming the ‘average’ by roughly 1.2%. Allan Gray Namibia Balanced Fund underperformed the ‘average’ by 1.2% on the other end of the scale. Note that these returns are before (gross of) asset management fees. The Monthly Review of Portfolio Performance to 31 August 2024 reviews portfolio performances and provides insightful analyses. Download it here... |
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| How to hedge your bets on the road to a new world order | ||||
| In a global conflict, the dynamics would change drastically. It would severely disrupt international trade, financial flows, economies, and supply chains while reallocating resources towards the war economy and essential services. While global investment diversification is a sound investment principle, keeping your belongings under your control and close to home will be wise, as your foreign assets are likely impaired and inaccessible in a global conflict. We live in a time between a fainting old and a new world order. One cannot foresee what the new world order would look like. It could be a capitalist autocracy, a more pragmatic multipolar order or a socialist autocracy. The old world order is likely to end within the next five years. The world will then witness a global confrontation, laying the foundation for the future world order. In this interregnum, we will experience high levels of market volatility and large swells between out-of-favour and in-favour sectors, but markets generally drifting along. Stock-picking skills will prove superior to index investing. The investor must understand how the feared conflict will impact stocks to select the right stocks. The Monthly Review of Portfolio Performance to 31 August 2024 reviews portfolio performances and provides insightful analyses. Dowload it, here... |
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| The FIMA and the oversold notion of ‘global best practice’ | ||||
| NAMFISA prides itself with this omnibus legislation, as representing global best practices. It has put a lot of energy into this legislation, and understandably, it refuses to move off its fixed standpoint, believing that global best practices are all that is required. But are global best practices necessarily appropriate for Namibia? Has NAMFISA ever tried to question its position and establish if the new legislation's cost is economically justifiable? For all bigger infrastructure projects, an environmental impact assessment has to be carried out before the government can proceed. This new legislation is a massive project that has never been subject to an environmental assessment study, and we have no clue about its impact on the economy. The man in the street whose investments are to be protected through the FIMA is not financially sophisticated enough to understand what a cost factor of 1% per year of their investment value over 30 or 40 years would mean for their retirement wellness. They rely on someone unknown to ascertain that their interests will not suffer. NAMFISA believes it is responsible for protecting his interests – and relies on global best practices. However, its is not accountable to the man in the street. Being responsible but not accountable has never been a good recipe. The Minister of Finance is responsible to the president, who is answerable to the electorate. However, as the NAMFISA CEO acknowledged, “FIMA is quite technical, and as a technical act, not everybody understands financial matters, and even our financial literacy in Namibia is quite low...”. He is quite correct and it is too technical for those accountable to the electorate. Simply resting on the global best practice laurels is not sufficient. The parliament needs a different model for evaluating such complex and technical laws. In a previous newsletter, I proposed a model for the parliament to apply to such technical laws. We have appropriate experts in Namibia who can advise, and it is crucial to rely on local industry experts instead of foreigners because they must implement the new laws. If the new law is beyond their capabilities, the government must expect to face endless problems in the future. Although local experts were allowed to provide their input, most critical issues dealing with the principles were ignored for not being global best practice. As often expressed by NAMFISA, it suspects the industry of having an agenda of making as much money as it can at the cost of the consumer. For that reason, NAMFISA is always suspicious of advice from industry experts and instead relies on foreign experts (who, of course, never have an agenda except perhaps to establish a never-ending dependency between them and their Namibia clients.) I acknowledge that local industry experts do and should have a business motive. That does not mean that the business motive is short-term and unsustainable. On the contrary, the motivation of a prospect of gain drives human activity. To manage the risk of the profit motive killing the man in the street, we only need to ensure competitive market conditions and proper risk management at the top level! It seems that dependencies on foreign agents are forced upon Namibia (as referred to in the following article on new cross-border payment rules), or we subject ourselves to ‘benevolent’ foreign agents voluntarily because we do not trust our local experts! |
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| New cross-border payment rules – FATF bullying CMA? | ||||
| Gone are the days when making an EFT payment to someone within the CMA was fast, cheap and painless. It seems CMA regulators caved in on FATF pressure (and to reverse their greylisting), allegedly because treating cross-border payments as domestic transactions was not compliant with international Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) standards. The new rules remove a vital benefit for CMA residents and their countries being part of the CMA. As fund administrators, RFS must regularly pay fund benefits to someone living in SA or another CMA country. CMA residents living outside Namibia were used to receiving their benefits promptly, at a low cost and without red tape. These new rules do not amuse them. One ‘The Namibian’ reader asked in ‘SMS of the day” of 3 September, “Can ‘The Namibian’ please investigate the impact of the UBO rules and other FATF implemented by FIC on the average Namibian? It seems all Namibians are treated as criminals and not citizens of an independent country...” Another reader commented, “How can you [BON and FIC] treat Namibians as criminals and contribute to the deteriorating business environment and increasing costs of doing business?” The problem with the global financial system is that rules are made for those who cannot stand up for themselves but do not apply to those who made the rules. (How else do Western countries pride themselves on sponsoring ‘regime change’ all over the world?) The fact that CMA countries may use their own currencies at home does not change the fact that all financial transactions outside CMA countries are Rand-denominated. For all intents and purposes, the Rand is the official currency of all CMA countries for international trade. European Union countries, similar to CMA countries, use a single currency for financial transactions with countries that are not members. No FATF currency controls are imposed on Euro transactions between European Union member countries. The EU operates under the principle of free movement of capital, which includes the free transfer of funds and payments between member states! |
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| 11 Predictions for the next ten years | ||||
| Here is an amazing article from Benchtest 12.2014, circulated on 26 January 2015. Ten years later, every prediction has materialised as if David Murrin had a hand steering their realisation! “James Rickards, an American lawyer, regular commentator on finance, and the author of The New York Times bestseller Currency Wars, first acquainted the editor of this newsletter to the concept of financial war games, defined by James as a branch of 'asymmetric or unrestricted warfare'. The editor of the Benchtest newsletters consequently realised that there is a close linkage between politics and economic interests that should never be underestimated or ignored when interpreting and understanding economic events. David Murrin, globally acclaimed scientist, asset manager, historian, lecturer and author ('Breaking the Code of History'), made 11 predictions for the next ten years [in 2014!] that are very interesting in the context of politics and economic trends.” Here are the 11 predictions.
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| COMPLIMENT | ||||
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Compliment from a former pension fund member
Dated August 2024 |
“Once again, thank you Ms. S for efficiently and effectively attending to inquiries regarding my file. You have been of such help since last year and I really appreciate it.” |
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Read more comments from our clients, here...
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| BENCHMARK: A NOTE FROM GÜNTER PFEIFER | ||||
| The status of converting to Everest | ||||
| By the end of August, the take-on of member static data and member fund credits for all employers and all retail products of around 20,000 members had been finalised. The rules and categories set up were also completed for all employers and retail products. While RFS made good progress on the accounting data take-on as of 30 June, there was still a way to go until the completion of this task. The first contribution runs were still in progress, while all payrolls ran successfully. As soon as all reconciling items have been cleared, RFS will proceed with the unit pricing and investment cash flows. Our former Managing Director, Tilman Friedrich, always said he would never want to go through an administration system conversion. However, in the interest of RFS’ technological advancement and the extensive requirements of the FIMA, RFS was left with no choice but to venture into the dreaded conversion. Such a project is never easy. It will experience hiccups and unexpected challenges along the way. With the experience RFS gained on its free-standing funds’ conversions, we are confident we will conclude the project successfully sooner than we have anticipated so that RFS and its clients can experience the benefits and enhancements of the new administration platform. We appeal to our Benchmark clients to bear with us with patience and indulgence! |
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| Important circulars issued by the Fund | ||||
| The Benchmark Retirement Fund issued no new circular since the previous newsletter 202309 – changes to survivor annuity investments. Clients are welcome to contact us if they require a copy of any circular. |
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| NEWS FROM RFS | ||||
| Another feather added to RFS cap | ||||
| RFS prioritises the ongoing education and professional development of its staff. As Nelson Mandela once said, “Education is the greatest equaliser,” and by investing in the education and training of its employees, RFS is helping to create a more skilled and knowledgeable workforce. Pursuing further education can be challenging and arduous, which is a testament to the hard work and dedication of those who have achieved this milestone. By supporting its staff in their pursuit of further education, RFS is also investing in the long-term success of its business. As staff members become more skilled and knowledgeable, they are better equipped to provide high-quality service to clients and to help the company stay competitive in a rapidly changing market. We wish the following staff member continued success in the future as you continue to prioritise education and professional development and congratulate Sebastian Frank-Schultz on completing the Financial Planning Institute of South Africa’s CFP® Professional Competency Examination with flying colours! He should soon be authorised to add the ‘CFP®’ designation to his title. His qualification would lift the number of professionally qualified CFP® practitioners employed by RFS to three. We wish Sebastian all the best on the road to greater heights! It is a remarkable achievement and a shining example for others to follow! |
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| Long service awards complement our business philosophy | ||||
| RFS places a high value on its employees and recognises the importance of their contributions to the company’s success. Long service awards are a great way to acknowledge and celebrate the commitment and loyalty of employees who have been with the company for a significant time. In addition to recognising employees’ contributions, long service awards can be a powerful retention tool, demonstrating that the company values and appreciates its employees’ dedication and hard work. These awards create a positive and motivating work environment where employees feel supported and encouraged to continue to grow and develop within the company. In September amd October, RFS celebrates the following anniversaries:
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| RFS 25th anniversary celebration | ||||
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RFS celebrated its 25th anniversary at the Eagles Beer Garden on Thursday, 5 September 2024. It was another unique, home-grown occasion in a pleasant setting with exceptional catering, as RFS clients, associates, and friends have come to expect over the past 25 years! The following feedback is how some of our guests experienced the evening:
“Dear Gentlemen & Lady… On behalf of the Agra Ltd. executive team, I would like to express our sincere gratitude for RFS Fund Administrators - 25th Anniversary Function last night. It was very enjoyable, and congratulations once again on the achievement of this milestone. Have a splendid weekend. Best Regards Griffort Beukes | General Manager: Human Resources” “Dear RFS 25 Team, Thank you very much for the splendid evening you treated me and all your invitees to last night. I thoroughly enjoyed meeting up with many old friends and having interesting discussions with a number of other guests and staff members in Blue. The entertainment, formal speeches and excellent food and drinks made it a memorable event fit for a 25-year celebration. Thank you for serving us as clients and the Namibian pension (administration) industry for the past quarter century and all the best for the completion of the rest of a full century of excellence. You have proven yourselves, just continue the good work! Kind regards, Wessel van der Vyver” In the RFS time capsule of 5 years ago, we found the following encouraging words: “Dear RFS and Benchmark, I look forward to celebrating your silver anniversary. I know you will have scaled even greater heights. Every blessing to you” – Andreen Moncur “The wagon has been pulled through various rivers. – Now you need to pull it up the hill for the years to come.” – Tessa Kok “RFS – may you have grown from strength to strength into 2024! See you in 2024. Keep it up! The journey of a thousand miles begins with one step!” – Heidi, Bank BIC Here is a photographic impression of the evening. |
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| Speeches and acknowledgements | ||||
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| RFS staff serving our guests exquisite cuisine | ||||
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| RFS sponsors Coppelia ballet | ||||
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RFS proudly sponsored the Coppelia ballet at the National Theatre of Namibia, showcasing 30 talented dancers, most of whom are still in school.
Supporting the arts is integral to fostering creativity and discipline among our youth. We believe that investing in their talents today contributes to a brighter, more vibrant future for our country. RFS remains committed to empowering the youth and enhancing their educational and artistic experiences, ensuring they have the tools they need to succeed in all their endeavours. The company looks forward to continuing its support for initiatives that uplift the community and foster the growth of Namibia's young talents |
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| RFS AA Compliance | ||||
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The Employment Equity Commission recently completed RFS’ annual Affirmative Action review and gave it an 85% ‘A’ rating.
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| The RETIREMENT COMPASS | ||||
| RFS Fund Administrators sponsor this newsletter as part of its social responsibility and its initiatives to support the retirement fund industry. It aims to provide members of funds managed by RFS Fund Administrators and other parties in their network with retirement funding and planning-related news and insights presented understandably. Read the latest Retirement Compass here... |
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| Important circulars issued by RFS | ||||
| RFS issued no new circulars after circular 2024.08-05 in August: Clients are welcome to contact us if they require a copy of any circular. |
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| NEWS FROM NAMFISA | ||||
| FIMA is still under review | ||||
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‘The Observer’ on 5 September reported the following on the status of the FIMA.
“The technical committee under the Ministry of Finance is still scrutinising the Financial Institutions Markets Act (FIMA). The Windhoek Observer understands that while public consultations have concluded, the research component is ongoing, and findings have yet to be presented to the finance minister. During a media engagement last week in Windhoek, Namibia Financial Institution Supervisory Authority’s (Namfisa) chief executive officer, Kenneth Matomola, stated that FIMA can only come into effect once the minister gives the green light. “As it stands now, FIMA can only come into force once the minister says, ‘Yes, let’s go and implement,’” he said. Matomola explained that the delay in finalising FIMA stems from a lack of broader consultation on the benefits of subordinate legislation, which necessitated preservation...” Read the full article here... |
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| Industry meeting feedback | ||||
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An industry meeting was held at NIPAM on 10 September. Mrs Carmen Diehl of RFS attended and prepared the following notes. Download the abbreviated presentation here...
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| LEGAL SNIPPETS | ||||
| FundsAtWork vs AM Guarnieri and others on the distribution of death benefits | ||||
| Section 37C of the Pension Funds Act of 1956 is pivotal in distributing death benefits within the South African pension fund framework. Its primary objective is to protect the financial well-being of those dependent on the deceased member, ensuring that their needs are considered when allocating benefits. The section aims to strike a balance between the member's wishes (as expressed in their beneficiary nomination) and the actual needs of dependants. Key Terms and Concepts Before diving into the specifics of the section, it’s essential to understand the definitions and roles of the key parties involved:
Upon the death of a pension fund member, the board of trustees is tasked with several critical responsibilities under Section 37C:
The judgment by Judge Wallis in FundsAtWork Umbrella Pension Fund v. Guarnieri and Others (830/2018) clarifies the timing aspect when determining who qualifies as a dependant.
The distinction in timing between dependants and nominees is a crucial aspect of the distribution process:
The judgment has several practical implications:
Section 37C of the Pension Funds Act protects the financial security of those dependent on the deceased member. The judgment in FundsAtWork Umbrella Pension Fund v. Guarnieri underscores the importance of timing in determining who qualifies as a dependant, emphasising that this determination for dependants must be made at the time of distribution rather than at the time of death. This approach ensures that the distribution of benefits aligns with the current needs of dependants, fulfilling the social welfare objectives of the Act. Trustees, members, and potential beneficiaries must understand these nuances to navigate the distribution process effectively and equitably. Editor’s note: This judgement creates a problem for trustees. Obtaining information on dependants is usually a drawn-out process. As a result, the dependants’ situation regarding their dependency on the deceased member would likely have changed in many cases by the time the trustees make the distribution. The judgement implies that the trustees must contact all identified dependants to establish if and how their dependency has changed. This follow-up process could take some time, and the dependants’ situation could change once again since it was initiated. Is it a classical case of squaring the circle? |
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| Section 14 Transfer to SA Fund | ||||
| How will a transfer from a Namibian to a South African fund under PFA section 14 be treated for income tax purposes? Here is the response RFS received from Inland Revenue: "Please be informed that a transfer from an approved Namibian fund to a South African fund does not imply a receipt or accrual in terms of the definition of "gross income" in the Income Tax Act. There is also no accrual of any benefit to any member of the [Namibian] fund. The Namibian pension fund administrator should obtain clarity from NAMFISA, their counterpart in South Africa, and SARS on whether such transfer can be done and the requirements to do such transfer." |
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| Can retirement capital be transferred from a retirement annuity to a pension fund at retirement? | ||||
| This question is intricate, particularly because retirement annuity funds are offered mainly by insurance companies even though a retirement annuity fund is a pension fund subject to the Pension Funds Act. Because insurance companies offer it as an insurance product, the Long-term Insurance Act and the Pension Funds Act apply to retirement annuity funds. The Long-term Insurance Act does not explicitly prohibit the transfer of capital accumulated in an individual policy to a pension fund, but this would have to be provided for by the rules or policy of the product. (The Act prohibits the transfer of an insurance business or a particular type of insurance business to another entity without approval by the High Court.) The Pension Funds Act similarly does not prohibit the transfer of capital accumulated in an individual pension fund to another entity, but this would have to be in terms of the rules of the pension fund. The Pension Funds Act makes provision for transferring business to or from another entity, which does not have to be a pension fund, in terms of section 14. Where individual transfers are allowed in terms of the product rules or policy, these are benefits the product pays. The Income Tax Act defines how benefits are taxed and prescribes what type of benefits an approved fund (retirement annuity, pension, provident, and preservation fund) may offer. In the case of pension fund benefits, the Act allows benefits to be transferred tax-free from any approved fund, other than a retirement annuity fund, to any other approved fund, including a retirement annuity fund. The ‘preservation fund’ definition prohibits transferring a member’s interest between two preservation funds. The definition of the ‘retirement annuity fund’ allows members’ interest to be transferred between approved retirement annuity funds. Such a transfer is not a benefit or taxed, as the only benefit a retirement annuity may pay is a life annuity, of which up to one-third may be commuted. A transfer from a retirement annuity fund before retirement is typically prohibited in terms of the product rules or policy as the insurer uses actuarial calculations to determine premiums, guarantees and benefits dependent on fixed pre-determined parameters that cannot be made subject to member discretion. At retirement, the policy matures (or terminates) and then typically allows the transfer of a member’s interest to another retirement annuity fund. Therefore, this transfer would not constitute a benefit and is not subject to taxation. Members of a retirement annuity are thus prevented from transferring their interest to another approved fund upon retirement by the definition of ‘retirement annuity fund’ in the Income Tax Act, which means that this Act would have to be amended. (Note that section 14 of the PFA allows such transfers.) If one wanted to accommodate such transfers before retirement, the product rules or policy would have to be amended, which should be possible for investment-linked products without any risk benefits or other guarantees but is not likely to be considered by insurers for any other type of product. |
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| SNIPPETS FOR THE PENSION FUND INDUSTRY | ||||
| Pruning your wealth farm | ||||
| The article by Dawn Ridler uses gardening metaphors to explain how managing a wealth portfolio requires ongoing care and adjustments to ensure long-term health and balance. Just as plants need regular pruning to thrive, a wealth portfolio must be periodically reviewed and rebalanced to avoid risk from over-concentration in certain assets or sectors. Ridler emphasises the importance of having an "advice-led" portfolio that aligns with specific financial goals. She contrasts this with a "DIY" or "organic" approach, where portfolios often grow unchecked, leading to imbalances, such as one stock dominating a portfolio and increasing risk. She explains that portfolio objectives—whether for retirement, passive income, or legacy planning—dictate the appropriate asset allocation and must evolve. Changing market conditions, personal circumstances, and regulatory factors also impact how a portfolio should be managed. Pruning involves taking profits, diversifying investments, and rebalancing to prevent risks, much like cutting off the first fruit of a young tree to strengthen its growth. Ridler also warns against excessive reliance on market-cap-weighted ETFs, which can lead to unintended concentration risks, similar to certain shares dominating an index like the JSE or Nasdaq. She stresses that a more prudent approach is necessary for retirement portfolios, in line with regulations such as South Africa’s Regulation 28. Read the full article by Dawn Ridler in Moneyweb of 15 August 2024 here… |
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| Don’t invest in an investment you don’t understand or can’t value | ||||
| In this podcast, Ryk van Niekerk interviews Derinia Mathura, manager of the Melville Douglas Global Equity Fund. Derinia emphasised the importance of fundamental understanding in investing. She shared that, as a fundamental analyst, she prioritises understanding the valuation and drivers of an investment before committing to it. Her approach aligns with a "quality growth" strategy, focusing on companies with substantial competitive advantages or "moats" that protect them from competitors. She believes in investing for the long term, particularly in equities, which she argues tend to outperform over time despite short-term volatility. Mathura prefers individual companies over funds but admits that broader market exposure, like ETFs, can be a good starting point for those with less in-depth knowledge. Her investments reflect her professional philosophy, which is biased towards global equities, particularly in quality growth stocks. Her strategy is built around a clear understanding of what drives value in a company. For instance, she avoids investing in cryptocurrencies, which she cannot value or understand fundamentally. Instead, she focuses on sectors or companies where she can make educated predictions based on supply, demand, and market fundamentals. Read the interview in Moneyweb on 5 September 2024 here… |
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| SNIPPETS OF GENERAL INTEREST | ||||
| A reality check on Namibia’s green hydrogen ambitions | ||||
| South Africa has strong potential to play a vital role in the global energy transition through green hydrogen, thanks to its abundant renewable energy resources, especially sun and wind. Green hydrogen is produced using renewable energy to split water into hydrogen and oxygen, unlike grey hydrogen, derived from fossil fuels. Green hydrogen is viewed as a viable alternative for sectors that are difficult to electrify, such as heavy industry, aviation, and long-haul transportation. While the European Union has pledged €32 million (R628 million) to support South Africa's green hydrogen industry, experts caution that this is insufficient. Green hydrogen production remains expensive, with costs between US$5 and US$8 per kilogram—about five times the cost of fossil-fuel-based hydrogen. Substantial government subsidies, international investments, and favourable regulations—such as carbon taxes and mandates for sustainable chemicals like green ammonia—are essential to make green hydrogen competitive. South Africa has ambitious goals to produce one million tonnes of green hydrogen annually by 2030, which could contribute R75 billion to its GDP and create up to 370,000 jobs by 2050. However, achieving these targets depends heavily on external financial support, particularly from the global north. The current grants from the European Union represent less than 0.2% of the estimated R410 billion needed to meet the 2030 production goals. Moreover, the risks associated with green hydrogen megaprojects, including cost overruns, delays, and stranded assets if demand does not materialise, are significant. The European Court of Auditors has also raised concerns about the high costs, infrastructure bottlenecks, and overly optimistic expectations surrounding the green hydrogen market. These warnings serve as a crucial reality check, highlighting that early-stage enthusiasm could lead to value-destructive projects where returns do not justify the investments. While South Africa has the potential to become a global leader in green hydrogen, significant international support is needed to manage the financial risks. The global south, including South Africa, may bear much of the risk, while consumers in the global north benefit from the product. Caution for Namibia: Like South Africa, Namibia is caught up in the green hydrogen excitement, driven by similar hopes of economic transformation and job creation. As Transnamib just announced the suspension of its green hydrogen conversion project, the warnings from the European Court of Auditors should not be ignored. Namibia must approach its green hydrogen ambitions with caution and realism. Production costs are still high, and international financial support is uncertain. Large-scale projects frequently face cost overruns, delays, and operational risks, potentially leaving Namibia with stranded assets and unfulfilled promises if demand for green hydrogen does not meet expectations. As Namibia looks to develop this sector, it should carefully consider these risks and ensure that any green hydrogen initiatives are built on realistic financial projections, strong international partnerships, and a clear understanding of the challenges ahead. Read the article in Businesstech of 15 September here... |
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| Investing offshore – where to start | ||||
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Offshore investing provides access to a broader range of investment opportunities and currency diversification and can help preserve and grow wealth over the long term. However, it is essential to approach offshore investing as part of a strategic asset allocation rather than reacting to short-term market volatility or negative news headlines.
Reasons to Invest Offshore:
Currency Considerations: Exchange rates fluctuate due to factors like economic growth, inflation, and interest rates. Although exchange rates can deviate from theoretical values, trying to time currency movements is difficult. For example, the South African Rand frequently trades outside its estimated fair value. Currency risk adds volatility to offshore portfolios, making asset allocation and understanding valuations critical for long-term success.
Offshore Investment Strategies:
Choosing the Right Investment Manager: Selecting a trusted investment manager with a strong track record and low fees is crucial. A well-diversified portfolio with appropriate asset allocation helps achieve long-term goals.
Conclusion: When investing offshore, it is essential to:
Offshore investing offers opportunities but requires careful planning and strategy.
Read the article by Francis Marais in the May 2024 edition of Cover here...
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| AND FINALLY... | ||||
| Wise words from wise men | ||||
| ""Know thyself." ~ Socrates 469 – 399 BC. This quote underscores the importance of self-awareness. Socrates believed that true knowledge begins with knowing oneself—a critical step towards wisdom. |
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| Unsubscribe If you do not want to receive these newsletters {unsubscribe}click here...{/unsubscribe} Disclaimer Whilst we have taken all reasonable measures to ensure that the results reflected herein are correct, Benchmark Retirement Fund and RFS Fund Administrators (Pty) Ltd do not accept any liability for the accuracy of the information and no decision should be taken on the basis of the information contained herein before confirming the detail with the relevant portfolio manager. |
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