Changing Regulation 28: A solution looking for a problem

South Africa’s investment shortfall does not stem from a lack of domestic capital, but from weak public-sector governance, limited competitive advantages and too few viable opportunities. Forcing retirement funds and other institutional investors to allocate more assets locally would constrain diversification, increase risk and ultimately weaken the savings pool on which financial stability depends. According to Sandy McGregor and Matthew Patterson, a better policy response is to strengthen public sector institutions and create conditions that allow private capital to invest where sound opportunities exist.