South Africa’s National Treasury is working on measures to encourage private investment in infrastructure projects, an initiative it hopes will silence calls from other quarters in the government to compel pension funds to help finance their development.

Amendments may be proposed to pension-fund legislation to “crowd in” private-sector financing, David Masondo, one of the country’s two deputy finance ministers, said in a speech Wednesday. Finance Minister Enoch Godongwana may make an announcement in his budget update in late October “that may make the calls for asset prescription unnecessary,” he said.

Prior to May elections, the African National Congress, which had ruled South Africa since apartheid rule ended in 1994, pledged to make it mandatory for the financial sector to make adequate funds available for industrialisation and economic development. But the party lost its outright majority in the vote and entered into a coalition with nine rivals, some of which oppose the plan, and it’s unclear if the new administration will implement the policy.

The Financial Sector Conduct Authority, a government regulator, has warned that any move to dictate to pension funds how to invest would infringe on their fiduciary duties.

Masondo said that a prescriptive investment policy would adversely impact on the effectiveness and efficiency of the capital markets, and money allocated to under-performing state companies that they would not otherwise have received could be squandered.

“Recipients of the prescribed funds may be incentivised to manage the entities inefficiently as they will be guaranteed funds regardless of how they are managed,” he said. Pension funds may also earn below-market returns, impacting on their ability to meet their liabilities, and forcing them to increase contributions, while subjecting retirees to lower benefits, he added.

“Foreign investments and investor confidence in the efficiency of the capital markets will be undermined, thus reducing available savings,” Masondo said.

In March, South African President Cyril Ramaphosa said as much as R1.6-trillion in public-sector infrastructure investment and a further R3.2-trillion from the private sector will be needed for the country to achieve its infrastructure goals by 2030.

“We do have a huge financing gap for our investment portfolio as well as industrialisation, but I don’t think that asset prescription is the right solution,” Masondo said.