South Africa’s National Planning Commission (NPC) has released a report calling for a fundamental rethink of how the country’s financial system allocates capital. It focuses on a real and pressing problem – too little money is flowing into long-term productive investment, particularly infrastructure.

The commission highlights weak gross fixed capital formation, which includes roads, power plants, ports, water systems, railways, factories, and technology. These assets underpin growth, productivity, and jobs. South Africa’s fixed investment rate has fallen from about 20% of gross domestic product in 2014 to roughly 15% today.

As an advisory body to the Presidency, the NPC argues that the financial system is structurally biased towards short-term private returns rather than sustained public investment. According to the report, this bias has contributed to chronic underinvestment and entrenched inequality.

The diagnosis is largely uncontroversial. The proposed remedy is not.

At the centre of the report is a call for the state to take a far more directive role in allocating capital. This includes steering pension funds and other institutional investors into state-backed infrastructure projects. In effect, this amounts to a revival of prescribed assets.

Prescribed assets are not new in South Africa. From 1958 to 1989, pension funds and insurers were legally required to invest in government bonds and state-owned enterprises. The policy helped the apartheid state secure cheap funding during sanctions and isolation, but it came at a cost.

Much of the capital was poorly allocated to inefficient monopolies and politically driven projects. Returns were often negative in real terms, as the state kept interest rates low to borrow cheaply. When these investments failed, taxpayers absorbed the losses through bailouts. The Truth and Reconciliation Commission later examined prescribed assets as tools of coercion and political control.

That history matters because the NPC’s logic comes close to repeating it. The report criticises the shift away from direct state control in the late apartheid years and after 1994, arguing that the so-called neoliberal framework gave private capital too much autonomy. In this model, the state influenced the economy through regulation, taxation, and spending, but did not directly command investment decisions.

According to the NPC, this approach prioritised investor interests over social outcomes. Capital chased short-term returns, often offshore, instead of funding domestic infrastructure. The result, the commission argues, was underinvestment in critical sectors and persistent inequality.

The proposed alternative is a tightly coordinated financial system in which banks, pension funds, development finance institutions, state-owned enterprises, and government are actively aligned behind national development goals. Pension funds are at the centre of this vision.

The report recommends two headline changes. First, it suggests reducing offshore investment, currently capped at 45% under Regulation 28. Second, it proposes that pension funds allocate 20% of assets to local infrastructure. The NPC claims this could unlock a R1 trillion infrastructure pipeline, backed by the state. Compliance would be enforced through mandatory investment plans and regular reporting to regulators.

In practice, this is prescription by another name.

This is where the proposal collides with reality. Regulation 28 was revised in 2022 precisely to encourage infrastructure investment, formally recognising it as an asset class and allowing funds to invest across public and private projects. Despite this, pension fund exposure to infrastructure remains around 2%.

This is not ideological resistance. It reflects the limited pool of bankable projects. Once weak revenue models, governance risk, political interference, and regulatory uncertainty are stripped out, only about 20% of South Africa’s infrastructure pipeline is investable for pension funds. Realistic funding needs are closer to R75 billion to R100 billion, far below the scale implied by the NPC.

Infrastructure can be an attractive long-term asset. It offers stable, inflation-linked cash flows that match retirement liabilities. Globally, pension funds access it through municipal and green bonds, corporate debt, public-private partnerships, and specialised funds. In South Africa, these markets remain thin. Listed infrastructure options are scarce, and project and green bond markets are still small. Meaningful exposure largely sits in private markets, requiring extensive due diligence by trustees.

This brings the debate back to first principles. Pension funds exist to protect and grow the retirement savings of millions of South Africans. Trustees are legally bound to act in the financial interests of their members, not to compensate for state failure or pursue policy objectives.

South Africa does not need a return to apartheid-era financial controls, no matter how carefully they are repackaged. Prescribed assets did not rescue the apartheid economy. They delayed its reckoning and shifted the cost onto the public.