15 Aug 2024

Pension fund institutions have been advised to enhance financial resilience by diversifying their investments, as the economic outlook for 2024 appears challenging. Professor Emmunuel Botlhale, Trustee and Board Chairperson of the University of Botswana Defined Contribution Pension Fund, highlighted this need during his keynote address at the third annual Botswana Institutional Investors Forum held in Maun on Wednesday.

Speaking to an audience of institutional investors, Professor Botlhale emphasised that the stagnant economic growth projected for the upcoming year would likely result in poor investment yields. He encouraged pension funds to explore the increasing interest in alternative investments as a means to fortify their portfolios and secure better returns for their members.

“The outlook suggests that investment yields are not going to be very good. Thus, it is imperative that pension funds seek to diversify their portfolios to ensure their members retire comfortably,” Professor Botlhale stated. He challenged fund managers to adopt innovative strategies to navigate the pressures stemming from market fluctuations and geopolitical uncertainties that could impact their financial health.

Highlighting the reality of retirement income in Botswana, he remarked, “We find ourselves retiring at 30 per cent of our last paycheck. I believe we can challenge ourselves as pension funds to ensure our members aim for 60-70 per cent of their last paycheck upon retirement.”

Professor Botlhale provided a thorough analysis of the global, regional, and local economic landscapes and their potential implications for pension funds. He explored critical economic trends and offered strategic insights on how institutional investors, particularly pension fund managers, could face challenges through effective asset allocation and diversification.

The current economic environment, he noted, necessitates diversification beyond traditional pension investments. He urged fund managers to consider a variety of strategic avenues that may yield better returns, stressing the importance of not placing all their investments in a single asset class.

Professor Botlhale reiterated the urgency for pension funds to enhance their investment strategies in order to optimize returns, utilising advanced techniques and best practices to mitigate risks across diverse asset classes.

Themed, Strategic Allocation and Diversification; Strategies for Institutional Investors, the forum delved into innovative ways for the optimal allocation and diversification of institutional investments with a special focus on the influx of pension funds returning to Botswana.

 In his welcome remarks, North West District Council chairperson, Mr Itumeleng Kelebetseng, thanked the organisers for hosting the forum in Maun saying they had chosen an ideal area where possibilities for growth and investment were  boundless.

Maun, he said, was just more than a tourism destination but a centre of economic potential waiting to be harnessed. He said from agriculture, and eco-tourism to infrastructure development and renewable energy, the opportunities for strategic investment are immense.

“Our region is rich in resources not just in the natural sense but in the talent, resilience and innovation of its people. These are the assets that we as leaders and investors must allocate wisely to ensure sustainable growth and prosperity for future generations,” he added.

Mr Kelebetseng further appreciated the forum saying it provided a unique platform for participants to explore how best they could utilise opportunities through strategic assets allocation and diversification.

The platform, he said, gave them an opportunity to share knowledge, build partnership and most importantly to invest in the future of Botswana and the wider region.  He called on participants to make decisions that would not only benefit their respective institutions but also contribute to the sustainable development of the nation and the upliftment of its people. ENDS