Ramaphosa proposes new sovereign wealth fund – party officials

To help boost economic growth.
Presidency has not yet confirmed where the money for the fund will come from. Picture: Siyabulela Duda

South African President Cyril Ramaphosa has proposed setting up a sovereign wealth fund to help boost economic growth, and his ruling African National Congress (ANC) backs the plan, two senior party officials said on Tuesday.

Ramaphosa, who replaced scandal-plagued Jacob Zuma as ANC leader late last year, is trying to rekindle growth before next year’s national election.

There were no immediate details on where the money for the fund would come from. Most sovereign wealth funds utilise revenues from oil and gas exports. South Africa does not have significant energy deposits but has a large, albeit struggling, mining industry.

The idea of setting up a sovereign wealth fund, which other emerging markets such as Russia use to lift growth at times of weak commodity prices, was dropped by South African officials several years ago when commodity prices plunged.

“We support the idea, put forward by the president, of the creation of a sovereign wealth fund,” ANC Deputy Secretary General Jessie Duarte told reporters on Tuesday.

“It’s another mechanism to ignite our economic prospects.”

South Africa’s economy has performed poorly this year, despite a short-lived pickup in business and consumer conference around the time that Ramaphosa replaced Zuma as ANC leader.

Economists are sceptical that South Africa – a major producer of commodities such as gold and coal – could easily set up a sovereign wealth fund given its large budget deficit and shrinking mining sector.

Zizi Kodwa, a member of the ANC’s National Executive Committee, told Reuters that it would be government that would decide which revenues to use to set up the fund.

South Africa has a lot of mineral wealth, but it’s not up to the ANC to decide where to take the money from,” Kodwa said.

“A sovereign wealth fund could be an important source of stimulus, that is what we are saying.” 

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Just another way to steal…

Create the fund and invest it my cronies… Seems legit

Correct. Sadly we don’t have what it takes (such a common vision for the country) to make a success of it. It will become a political and racial football before it is ruined. Firstly, we don’t what is takes to start one, namely, surplus or windfall funds. Call me a sceptic but can you imagine the corruption. e.g. billions to ministers for home improvements/investments.

…where will funding come from?

From the SA TAXPAYER of course! (…and our corporate funds, brimming with pension fund assets).

(The mere idea is worrisome…)

Maybe he should try an Internal Wealth Creating Movement by getting the Civil Servants and the Unions to work instead of steal and strike.

Watch out for another attempt at grabbing money for this purpose from citizens’ pension funds?

Somebody please help me; what is a “Sovereign wealth fund/plan”?
How does it function?

Norway has the largest globally of any country

Each citizen of Norway has a holding in it…albiet small

The fund growth is through carefully managed investments, infrastructure, R&D etc

Norway’s oil & gas reserves are the funds main source of investment

Norway has a high ethical standard which is why their fund works so well

Just imagine if all the money that has been stolen and looted was in a SWF. We could probably fund a decent Government pension for all retirees. Never have so many been let down by so few (in Government).

Nice idea

Facts
* Economy basically in recession
* Declining tax base, exploding welfare payouts
* Skills fleeing country
* Commodity based economy in major decline
* Massive losses across all SOE’s

Push the snooze button and keep the dream alive!

A sovereign slush fund, more like it.

Countries with sovereign wealth funds don’t have debt.

This idea is as stupid as investing on the JSE before paying off your bond.

End of comments.

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