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The pensions of South Africa's civil servants – including teachers, nurses and police officers – are held by the state-owned Public Investment Corporation (PIC), the largest institutional investor on the continent, with more than R3 trillion under management. This makes it one of the top ten biggest government pension funds on the planet.

Within those broader holdings sit various funds. One is the Isibaya Fund, the corporation's developmental arm. In a recent written reply to Parliament, the Finance Minister, Enoch Godongwana, revealed that Isibaya had produced very poor returns over the past two decades.

The fund was established in the late 1990s with a dual mandate: to earn a financial return while channelling money into companies that drive socio-economic transformation. Its core criteria require strict adherence to broad-based black economic empowerment (B-BBEE), the policy framework meant to redress apartheid-era exclusion by bringing black South Africans into the ownership and management of the economy.

It invests only in unlisted companies, those not traded on a public stock exchange and therefore harder to value and less visible, in sectors meant to build critical infrastructure such as mining, telecommunications, agriculture, housing, and renewable energy. Currently the fund invests R87 billion in South Africa, or roughly 3% of all the PIC’s holdings.

Over the past two decades the fund has returned just over four percent per annum. This is very poor. Over the same period the Johannesburg Stock Exchange's All Share index returned roughly 11% a year, and the S&P 500 about the same in dollar terms.

The rot at Isibaya has been investigated so many times, and each inquiry has surfaced so much new detail, that the full story is genuinely difficult to write up. Every reckoning reaches the same verdict: that its investment objectives are political and ideological rather than safeguarding the interests of pensioners.

The first reckoning came in 2018, when President Cyril Ramaphosa appointed a commission under the retired Justice Lex Mpati. The commission found that the PIC had been politically captured and identified the Isibaya portfolio as the epicentre of the rot, with empowerment deals steered to politically connected insiders. Central to its findings was that Isibaya invested about R888 million to fund the acquisition of Independent Media, the publisher of the Cape Times and The Star, where the commission concluded that the transaction was handled with a deliberate disregard for PIC policy and standard operating procedures. That investment that has since been written down to zero.

By 2025 the PIC was conceding to Parliament's public accounts committee that a significant share of loans was distressed. A stark example was Daybreak Foods. Isibaya had poured some R1.4 billion into the poultry producer and watched it fall into business rescue in June 2025 amid fraud charges against its former chief executive and an animal-cruelty scandal. Today it is worth nothing.

Only recently, though, has the public glimpsed the full extent of the chaos inside Isibaya. Pressed by a series of written questions from the Democratic Alliance's Andrew Bateman, Godongwana laid before Parliament a deal-by-deal schedule of every Isibaya investment, valued as at 1 June 2026. The numbers that follow are drawn from it.

In South Africa it has invested about R87 billion across 173 deals. Nearly half of the 173 investments, 78 of them, are now worth less than the money put in. Sixteen have been written off entirely, returning not a single cent.

The single largest failure is AfriSam: R11 billion placed in the cement maker in 2008, of which barely a tenth, about R807 million, was returned.

The risk to pension funds broadly is that the African National Congress (ANC) in government is running out of the fiscal room it needs to finance its patronage networks. Scrutiny of how taxpayers’ funds are used has become increasingly intense and with the ANC polling at just 40% there is an understanding that those funds best be used for service delivery and welfare. Thinking around how to finance corrupt patronage networks therefore naturally turns to the state’s vast pension resources. Given how great these are it is a relatively simple matter to invest a portion in a manner that delivers no competitive return while still being able to meet monthly commitments to pension holders. The model of the Isibaya Fund is one that might easily be replicated to divert cash to cadres without arousing the immediate concerns of pension holders themselves. The ANC would likely not hold together as an organisation if the cashflow it directs through patronage was cut off or severely interrupted. The prospects are reasonable, therefore, that corrupt actors around the party will increasingly look for means to loot the government-administered pension funds.