Background on Afores and Their Role in Infrastructure Development
Guillermo Zamarripa, the president of the Mexican Association of Private Pension Fund Administrators (Amafore), emphasized the need for Afores to have well-planned and ready-to-implement infrastructure projects. According to Zamarripa, the federal government has yet to present such projects in the first year of the current administration.
Afores, or private pension funds in Mexico, are investors in the complex infrastructure development chain, focusing on financing rather than project execution or policy definition. Zamarripa clarified that the government decides which roads to build, not the Afores.
Current State of Infrastructure Project Development
Zamarripa noted that the federal government, under President Claudia Sheinbaum, is taking longer than anticipated to develop the promised infrastructure projects from the electoral campaign. He pointed out that the government had to complete previous administration’s works by the end of 2023, complicating the new administration’s efforts to kickstart infrastructure development.
Despite this, Zamarripa acknowledged that progress has been made in the first year of the current administration. The planning, prioritization of certain economic sectors, and legal changes aimed at streamlining the process have been accomplished.
Afores’ Investment Focus and Future Infrastructure Involvement
Zamarripa highlighted that Afores’ historical investments in infrastructure have been categorized into four main areas: electricity, connectivity (roads, trains, ports, airports), construction, and water. With the 2020 reform and gradual increase in mandatory contributions, Afores will have more funds for investment.
Zamarripa identified the challenge of investing these growing cash flows wisely, finding suitable long-term assets like infrastructure. Mandatory contribution rates to retirement savings accounts are set to rise from 7.5% in 2023 to 15% by 2030.
Key Short- and Medium-Term Challenges for Afores
In addition to the infrastructure investment challenge, Zamarripa mentioned other short- and medium-term goals for Afores. These include promoting voluntary savings, enhancing customer service and attention, and increasing financial education among the population.
Key Questions and Answers
- What are Afores and their role in Mexico’s infrastructure development? Afores are private pension funds in Mexico that focus on financing infrastructure projects rather than executing them or defining public policy. They are crucial investors in the complex infrastructure development chain.
- Why is Zamarripa emphasizing the need for pre-planned projects? Zamarripa believes that Afores require well-planned and ready-to-implement projects since the federal government has not presented any in the first year of the current administration.
- What are the main areas where Afores invest in infrastructure? Historically, Afores have invested in electricity, connectivity (roads, trains, ports, airports), construction, and water.
- What are the short- and medium-term challenges for Afores? Key challenges include investing growing cash flows wisely, promoting voluntary savings, enhancing customer service and attention, and increasing financial education among the population.
