Treasury to answer call for transformation in retirement-fund industry
MONEYWEB / 07 DECEMBER 2020 - 20.49 / NOMPU SIZIBA
‘Black asset managers are struggling to crack into the private retirement space’: Zukile Nchukane, Mianzo Asset Management.
NOMPU SIZIBA: Black fund managers are said to manage less than 10% of capital assets under management in South Africa, and black fund managers have been pushing for increased transformation in the sector. Traditionally, large white-run asset managers have dominated this scene due to South Africa’s economic legacy issues. And it now seems that National Treasury’s is heeding the call of black fund managers. Last week, Deputy Finance Minister David Masondo indicated that the government was working with the Financial Sector Conduct Authority in ensuring that the country’s 100 biggest retirement funds bolster their transformation efforts.
Well, to find out more about the issues and the implications of the deputy minister’s assertion, I’m joined on the line by Zukile Nchukane, the head of business development at Mianzo Asset Management. Thank you so much, Zukile, for joining us. Now, you represent a black-owned fund manager and you’re based in Cape Town. Practically speaking, what have been, or what are the challenges stacked up against black-owned and -run asset managers in being able to incrementally grow the share of assets that they manage in the bigger scheme of things?
ZUKILE NCHUKANE: Hi Nompu, and thank you for having me on the show. There are a number of issues. But the main one would be the intermediaries – that is, the asset consultants. These are the players that stand between the fund managers and helping retirement funds in terms of allocating assets to manage to black asset managers. Over the years, the black asset-management space has been generally supported by your state-owned enterprises, pension funds, provident funds and union funds, and so forth. And we’ve been struggling, really, getting into and getting some exposure to the private funds. And generally those heavily rely on the intermediaries, so to speak.
So I think that’s the main big one as you find that National Treasury is trying to legislate certain elements when it comes to the retirement space.
NOMPU SIZIBA: We understand that the Financial Sector Transformation Council, which is a non-profit company that was born out of the Broad-Based Black Economic Empowerment Act, is finalising a new BEE scorecard that will be specific to the retirement-fund sector. In simple practical terms, whatever the minimum guidelines that they end up prescribing, what would that mean for black-owned fund managers like yourselves?
ZUKILE NCHUKANE: I think we have to finalise the minimum amounts. But fortunately, if you think about, it right now assets, the universe, has round about R7 trillion in assets under management, and, as you pointed out, you’ve got just under 10% of that universe. So, I think in the short term we will be okay, maybe. When I say the short term in the three-plus year out, if we get to maybe something close to 30%, and we’ll take it from there.
But generally, which is why you find now there’s a bit of a reliance on the likes of National Treasury to make sure we move … when … comes to the space.
NOMPU SIZIBA: Are there any of the big asset managers who perhaps understand this intermediary issue that you just mentioned at the top of our conversation, and who are sort of going ahead of the curve and trying to engage with black fund managers – because obviously they started the race earlier?
Look, we understand the big brands, and we’re not antagonising anyone. Let me be clear on that.
Also, I’m not here to antagonise intermediaries themselves. They’ve been supportive to some extent. And the first movers – and the guys have been around much longer than us black asset managers – have done a great job in terms of creating and maintaining the infrastructure that we enjoy now as South Africans. And many of us black professionals in the space come from those companies.
So let me be clear, we’re not really here to antagonise anyone, but you will recognise, if you look at the numbers, there’s a systematic problem. We have one of our guys, similar profile guys, black asset managers, who’ve been around for just about 20 years, 16 years, and you find they really are struggling to crack into, particularly, the private retirement space.
Hence we come in and say, look, maybe there’s something there. And really the guys will help retirement funds in terms of allocating assets to asset managers as a consultant, so to speak. So maybe that’s where the conversation needs to be.
NOMPU SIZIBA: So, in terms of the number of black asset managers, are there many? I know, for example, that there are not many black charted accountants. And if the field was made a bit more level, so to speak, would there be enough black professionals out there to be able to take up any excess business?
ZUKILE NCHUKANE: Look, right now we’ve got just over 50 black asset managers in the country – and I’m talking about ownership, black majority-owned companies. And, as I said earlier on, most of us have got similar credentials, qualifications and experience for too many portfolio managers and stuff in the bigger houses, so to speak. So talent is there. The ability is there. As we always point out, Mr Hadebe in a big old asset management house would even be in mandate with private retirement funds. But the moment that he moves out of that stable, seemingly he is seen as a non-entity and he would start from scratch.
So what I’m saying to you is there’s enough talent. As I said, there are a roughly over 50 of us and we really do offer, across the spectrum, all the investment products that are out there.
NOMPU SIZIBA: One last question. Without any regulatory intervention, how long do you think it would take for black asset managers to be managing 25% of South African assets under management?
ZUKILE NCHUKANE: I always make this point. You want to see assets moving more [on a] natural basis, without asking the space to intervene. But the numbers speak for themselves. As I said, you’ve got asset managers, legacy managers, who have been in the space for 50-plus years, and there I am compared to similar-aged asset managers, one a black – they they’re really not that comparable. So, we really are opening up the conversation to say, look, what could be the problem. And obviously we have our own experiences in the space.
Legislation can assist in pointing to a particular direction, but ultimately for a real change, for us to be seen on an equal footing with the big players, there needs to be some acceptance from all parts of the industry, so to speak..
NOMPU SIZIBA: Indeed. Zukile, thank you so much for sharing the issues with us. That was Zukile Nchukane, the head of business development at Mianzo Asset Management.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER