The Government Institutions Pension Fund (GIPF) is at risk of losing around N$1 billion after a series of underperforming investments, including an "irrecoverable" N$815 million placed with a South African investment firm.
The investment, made through a company called Signal Structured Finance Fund, was managed by South African-based TriAlpha Investment Management as part of GIPF's offshore portfolio.
However, the value of the investment has since dropped sharply, prompting the pension fund to classify it as one of its biggest potential losses to date.
A 12-page report presented to the GIPF board of trustees on 24 September shows that Namibia's biggest pension fund has more than nine investments that are performing poorly, including some losing value, struggling to operate, or entangled in legal disputes.
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"Given the unresolved South Africa Revenue Service (SARS) tax dispute, the absence of up-to-date financial statements, the lack of redemption proceeds from this fund, and the deteriorating relationship with the portfolio manager, management is of the view that the Signal Structured Finance Fund is, at this stage, irrecoverable," reads the report.
TriAlpha's investments alone have been reduced by N$815.8 million, making it the biggest contributor to the pension fund's potential losses.
"The total impairment of unlisted and direct investment funds for approval for the year ended 31 March 2025 is, therefore, N$922 million," notes the report.
This is a sharp jump from last year, when impairments were around N$170 million.
In accounting terms, an impairment is a reduction in an asset's value when it is worth less than what was originally paid.
Since 2008 GIPF's total investment losses have now exceeded N$1.5 billion. This year's losses alone are more than five times higher than last year's.
The losses equal nearly 1% of GIPF's total assets, which are worth about N$160 billion, and more than 6% of the total amount pensioners can withdraw before tax.
Difficult to access
GIPF chief executive officer (CEO) Martin Inkumbi, who joined the fund last year, says the fund originally invested about N$6.6 billion in 2017 with TriAlpha, which then placed the money into six different offshore investment funds, including the Signal Structured Finance Fund.
After TriAlpha's mandate was terminated in October 2021, these assets - spread across multiple countries - became difficult to access or sell.
Of the total investment, about N$815 million has been set aside as a potential loss in the March 2025 annual financial statements. This means GIPF has earmarked the money to cover expected losses, representing roughly 7% of the original investment plus any returns earned so far.
One of the funds, the Signal Structured Finance Fund, now faces a tax claim from SARS of N$1 billion. If upheld the claim, along with penalties and interest, could wipe out the entire fund's value.
Inkumbi says the fund cannot rule out further losses.
"While we cannot guarantee that no additional impairments will arise, management is not currently aware of any immediate risks to recovering the fund's investments," he says.
TriAlpha CEO Prudence Lebina says the company cannot comment as the matter is in court.
"Please be advised the matter is sub judice and as such it would be inappropriate to comment," she says.
The board's current chairman is Eddy Oblowitz. Little is known about TriAlpha in Namibia. On its website, the company highlights its broad-based black economic empowerment credentials in South Africa, noting that it partnered with former African National Congress treasurer general Mathews Phosa in 2015 "as a fellow stakeholder in TriAlpha, resulting in more than a quarter black ownership." According to the company, Phosa remained involved with it until 2019.
Too little too lOO LITTLE TOO LATE
Chartered accountant Ally Angula questions why GIPF waited nearly four years to record the loss. The investment was terminated in 2021, but the impairment was only recognised in 2025.
She says the delay raises concerns about whether GIPF was receiving timely financial statements from its investment managers and whether warning signs were missed.
"It looks like a permanent write-down because there doesn't appear to be any prospect of recovery. So, although it is only being recorded now as an impairment, it is effectively a final loss," Angula told The Namibian this week.
"Why did it take them so long from 2021 to make such a big write-off? Have they not been getting financial statements for these assets to spot the red flags earlier?" she asked.
Angula noted that there is limited information on TriAlpha. She said GIPF and its auditors should have flagged the issue sooner, as impairment reviews are mandatory every financial year.
She said foreign investment managers should face the same scrutiny as local ones.
"If there was a recommendation of a change in process, it would be: 'treat foreign managers the same way you treat local ones'," she said.
Despite the large impairment, Angula said GIPF's overall finances appear secure. Pension payouts are guaranteed.
"GIPF is a very big fund. They have enough liquidity to cover payouts for the next few years. I'm not too concerned about their ability to pay benefits," she said.
Who decides where to invest?
GIPF's investment committee is made up of five members, with Petrus Nevonga as chairperson, and four members, Penda Ithindi, Nillian Mulemi, Rodgers Walters and Evans Maswahu. Ithindi also serves as chairperson of the GIPF board.
Questions sent to Nevonga, who is also the Namibia Public Workers Union's general secretary - which represents government employees, over a week ago were not unanswered.
Inkumbi says GIPF has a valuation policy that requires all the investments/assets to be valued by an independent valuator on a yearly basis. He says GIPF signs investments management agreements, and mandates each fund manager that outlines key performance indicators as it pertains to investments returns relative to benchmarks.
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"Any breach or deviation is dealt with in accordance with this agreement," Inkumbi says.
Pensioners dollars
The latest available financial statements for the year ended 31 March 2024 show that GIPF paid its retired members N$6.3 billion, of which over N$3.5 billion was disbursed as pension benefits.
Contributions from members in the same period stood at N$4.8 billion.
At the time of reporting, the fund had 99 722 members - an increase from 97 500 recorded in 2023.
The fund's assets are currently valued higher than the country's gross domestic product, standing at N$167 billion.
Of the total assets, N$40 billion is managed within the GIPF treasury portfolio, N$2.4 billion in direct investments, and N$117.1 billion by external investment managers, with N$12.6 billion allocated to international opportunities.
The fund says it is aware of the limitations of the Namibian market and is diversifying investments.
The GIPF's investment portfolio comprises equities, fixed income, derivatives, private equity, collective investment schemes, cash, and deposits.
The fund invested N$18.5 billion in private markets, N$13.6 billion in dual-listed counters, and N$8.6 billion in primary listed counters.
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