Pension funds, private equity and private debt in Southern Africa

The report examines pension fund investment patterns across eight Southern African countries, highlighting a general preference for government bonds and listed equities over private equity and private debt. It identifies regulatory constraints, a lack of professional expertise, and reputational risks as primary barriers to the growth of private markets. The document recommends increasing asset allocation ceilings, disaggregating private equity from broader 'alternative' categories, and developing regional investment frameworks to achieve economies of scale.

• There is a lack of standardized terminology for alternative investments in the region, with most national statistical agencies grouping private equity under general categories like "alternatives" or "other assets".
• Pension fund management in Southern Africa is heavily reliant on external expertise, with the vast majority using asset consultants or third-party advisers rather than in-house portfolio managers.
• While most pension funds' policies permit allocation to private equity and private debt, these remain secondary to bonds and equities, with government-issued debt being particularly dominant in less developed markets.
• Typical allocations to private equity range between 1% and 5%, whereas private debt allocations are often higher, with over 80% of survey respondents allocating more than 10% on an unweighted basis.
• A "nationalist" investment mindset and the absence of regional allocation tranches prevent the realization of economies of scale across Southern African pension markets.
• Sustainable investing is increasingly prioritized, with over 80% of respondents expecting it to become very important in the next five years; the UN's Principles for Responsible Investing (PRI) and Sustainable Development Goals (SDGs) are the primary influences.
• South Africa has led the region in sustainable investment policy through Regulation 28 of the Pension Funds Act, while the concept remains in its infancy in other African nations due to a lack of knowledge on ESG integration.
• Several countries have recently increased their private equity allocation ceilings to 15%, including South Africa (effective January 2023), Zambia (revised May 2021), and Zimbabwe (approved by IPEC board).
• In Botswana, the private equity market suffers from significant reputational damage following allegations of fraud and misappropriation of funds related to two local funds incubated by the BPOPF in 2015.
• Mozambique's pension market is characterized by heavy bank dominance, where banks often direct funds toward deposits or bonds to avoid disintermediation, and the private debt market has been damaged by a $6.5 million private bond default in 2021.

APA

FSD Africa (2022). Pension funds, private equity and private debt in Southern Africa. https://fsdafrica.org/wp-content/uploads/2025/05/SAVCA-Pension-fund-Study-22.08.22-2.pdf

Chicago

FSD Africa. Pension funds, private equity and private debt in Southern Africa. 2022. https://fsdafrica.org/wp-content/uploads/2025/05/SAVCA-Pension-fund-Study-22.08.22-2.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Pension funds, private equity and private debt in Southern Africa |date=April 2022 |url=https://fsdafrica.org/wp-content/uploads/2025/05/SAVCA-Pension-fund-Study-22.08.22-2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2022pension, author = {{FSD Africa}}, title = {{Pension funds, private equity and private debt in Southern Africa}}, institution = {FSD Africa}, year = {2022}, month = apr, url = {https://fsdafrica.org/wp-content/uploads/2025/05/SAVCA-Pension-fund-Study-22.08.22-2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }