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Thursday 17 January 2019
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GIPF explains DCP nightmare

The Government Institutions Pension Fund (GIPF) says it has drawn lessons from the Development Capital Portfolio (DCP) which saw over N$63.7 million vanishing into thin air.
The fund invested N$611 million at the time.
Responding to questions this week on the matter, GIPF’s manager for alternative investments Sara Mezui-Engo said since the DCP investment, the fund has adopted the best international best practises by ensuring good corporate governance and oversight.
“(There is) a dedicated team to manage the Unlisted programme; crafting mandates with careful portfolio construction in consideration of the overall portfolio and strategic asset allocation ensuring a rigorous process of fund manager due diligence and monitoring; ensuring alignment of interest by fund Managers to GIPF; as well as portfolio companies aligned to the fund manager and legal agreements that provide for investor friendly clauses.”
Last week, Mezui-Engo indicated that from the N$611 million which GIPF invested in the Development Capital Portfolio (DCP), “N$63 million was completely lost”.
“It is only in about three investments were the money was completely lost…N$63 million was completely lost.
The rest returned money, some did not return the full money,” she said last week.
The N$63 million was invested in six companies, namely: Tsongang Investment, Omina Investment, Sepiolite Investments, Black Square Investments, Namibia Chicken Investment and Namibia Plastics and Liquids.
Of the six companies, Tsongang Investment, Omina Investment and Sepiolite Investments did not return a single cent GIPF.
Meanwhile, Black Square Investments, Namibia Chicken Investment and Namibia Plastics and Liquids returned a combined N$4.68 million of the N$63.7 million which GIPF had invested in the six companies.
Seemingly justifying the lost money, Mezui-Engo said “businesses fail and business fail all the time”.
Asked whether there were any plans to recover the lost funds, Mezui-Engo replied: “All lost investments are subject of the on-going police investigations into this portfolio.
As a fund, if recovery of the investment are made it will be greatly be appreciated.”
When further probed as to how much profit GIPF had intended to make from the much-criticised DCP project, Mezui-Engo said: “At the most, GIPF may have considered the Government long bond rate or average lending rate at the time.
The N$146.8 million is as at 2010. If we have to take into account the investments still held to date that would be a better comparison.
“As at 2010, the return earned was positive but short of what was intended.
It is important to note that subsequently more earnings where realized from this portfolio, which we are still quantifying.  At the very least GIPF wanted a commercial return with socio-economic benefits.”
Between 1996 and 2006, GIPF invested N$611 million in the DCP projects on 21 companies.  Of the 21 companies, there was no return on investment for N$63 million that GIPF invested in three companies (unlisted investments).
Despite its financial shortcoming, the DCP had positive results on the socio-economic benefits.
A dossier obtained from GIPF shows that mining activities that continue to operate in the Tsumeb area owe much of their existence to the now defunct project.
The facilitation of Namibia’s first formal housing development in the north and the stimulation of an entrepreneurial spirit in the minds of many Namibians are some of the social benefits of DCP, according to the document.




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