SA to get sovereign wealth fund, state bank

More details expected in Finance Minister’s budget speech later this month.
Image: Shutterstock

President Cyril Ramaphosa confirmed in his State of the Nation speech on Thursday that the government is set to establish a sovereign wealth fund together with a new state bank.

Both proposals have been punted by the ANC over several years and have support from opposition parties such as the EFF, which saw its own proposal to nationalise commercial banks being shot down in Parliament in 2017.

The sovereign wealth fund and state bank plans have however, also had their detractors, including the DA.

Read: Ramaphosa proposes new sovereign wealth fund – party officials

“We have decided to establish a sovereign wealth fund as a means to preserve and grow the national endowment of our nation, giving practical meaning to the injunction that the people shall share in the country’s wealth,” Ramaphosa said.

“We are also proceeding with the establishment of a state bank as part of our effort to extend access to financial services to all South Africans,” he added.

The president did not give timelines for the establishment of the sovereign wealth fund or state bank. However he said that Finance Minister Tito Mboweni will provide details on the plans in his budget speech on February 26.

Mboweni himself has in the past also expressed support for a state bank. During a treasury budget vote debate in July last year, he mentioned that his deputy, David Masondo, had been tasked with leading the process for the establishment of a state-owned bank. Both Mboweni and Masondo have bemoaned the discriminatory nature of South Africa’s established banks.

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A ‘State Bank’? Like a SOE? We all know how that is working for us, don’t we. But, easy loans is a good thing, it will put people deeper in debt.

Can’t wait – I’m hoping for a R40 million loan re-payable over 20 years so I can get my small business in Mauritius up and running – so much more comfortable than where the Guptas went. I can spend the next 10 or so years of my life on fine dining.
So sorry, I forgot about the VBS thingy…….

Haha! Nice! Maybe Mr Ramaphosa will be the first depositor, putting some of those hard earned labor union billions to work.

How will the wealth fund be funded? What will its investment mandate be?
Most importantly — what will its purpose be? Not the vagueness espoused by Cyril. Specifics please.

State bank — and how will the bank be funded? Will it be taking deposits? How will it differ from existing banks or services?

These sound like new vehicles for looting the taxpayers. Not anything needed or useful

The Wealth fund can be funded by channeling part of the taxes into this fund. Example; 1% of income tax, a 14th of VAT, 2% of the fuel levy, 10% of the Sin taxes, so on and so on. No need to create a new tax regime but fund this initiative from the existing taxes.

State Bank will mean the POST BANK must be the vehicle to use.

This does not need rocket scientist to design, only leadership and vision is required.

… which will be found where? Oh there’s plenty in SA but not of the PC, socialist, morally-decrepit bent needed to pillage an entire Sovereign Wealth Fund

Gupta family must have put a request in to the ANC to form a State bank. They are still very upset about the closing of there bank accounts. The State bank can now be controlled and their funds guaranteed . The Cadres can also put their money safely away without the fear of it getting attached through ill gotten gains.

The state bank will rack up bad debts and losses in a heartbeat.

The notion that it will deliver banking services cheaper and more effectively than Capitec is a pipe dream, but one guesses it will use the post office infrastructure.

But in the end of the day it’s bound to be the lender of bailouts to SOEs and the government will discover that running a bank is even worse than running an airline.

As for a sovereign wealth fund, well first you need some investible wealth and in case you didn’t notice, we have none.

These are just grandiose boondoggles that politicians love so much.

Lets hope the “Sovereign Wealth” fund is Regulation 28 compliant.

This will ensure it is not exposed to undue risk.

Whahahaaa. These socialists with capitalist dreams.

If the wealth fund is like Norway : good. I am not optimistic and expect it being used for special interests.

The state bank’s sole purpose would be not to close the accounts of gupta, zuma and their hundreds of buddies. There is no other imaginable purpose given we already have SA Post Office bank if the need was a free bank account (to go with free everything else).

Madness. Our biggest problem is the SOE mess, so let’s create more.

If, you sink an airline where every politician in parliament can fly free on, and almost run into the ground Africa’s producer and supplier of the cheapest electricty by not paying, what could be the next big idea? Well, it’s not likely that you’d have something as big as the arms deal, so what can one settle for? How about a State Owned Bank that every politician can borrow from (and never pay back,ever ever!). IF, you missed out on the VBS public ‘hold up’, don’t despair, you still got a chance. Just say: ‘Yes’ to a state bank.

Who thinks that is a good idea – not me.

A state bank to give all SAns access to financial services, after having introduced a “debt forgiveness” programme in the Credit Act. That is classic ANC.

With our current and projected debt to GDP ratio it might be more appropriate to call it a “Sovereign Debt Fund”

When I read this I had a good laugh. Thank you CR for confirming you have no idea about SWFs and how they are created.

There is no formula only a plan and a will to start… Don’t copy other people’s/countries systems. That’s why South Africa fails on many fronts. Cut and paste is for the lazy.

To enhance financial intermediation; It makes sense for governments to use instruments such as a public bank to facilitate the development of financial markets, among other options, BUT I don’t quite believe that the anc has the capacity to manage something at this scale without it becoming a total disaster. Thus, the idea is good, but the implementation, given the government’s poor track record, will make it not work.

This bankrupt guy, who lost his business, and his house and car is in the process of being repossessed, makes an appointment with his bank manager.
He asks his bank manager for a loan. The bank manager asks him what he wants the loan for. So, this guys says “I need money to invest and build my pension fund because you took everything I had”.

Now, I feel like that bank manager when I hear that the ANC wants to implement a Sovereign Wealth Fund and a State Bank.

Our Sovereign has a debt/GDP ratio of 70% and rising. Our budget deficit is 6% and rising. Ou sovereign is facing a rating downgrade, and they want to start a Sovereign Wealth Fund. The Sovereign does not have any wealth! The rating agencies believe the sovereign is close to bankruptcy, but the ANC is under the impression that they are in a position to make investments.

This nonsense makes the entire SONA a farce. If the president can make a far-fetched, irresponsible, laughable and downright stupid comment like this, how should we value the rest of his speech? The man is an insult to his own intelligence.

Our government is like that kid that keeps coming back to the Idols auditions every year in the belief that he will learn to sing someday.

How do they not see a pattern?

Haha well said. Except that they measure success by votes… they have a mandate to continue pillaging

State Bank + ANC ??? seriously ?? that’s like letting the alcoholic guard the bottle store. The ANC has literally bankrupted SA. VBS anyone ?

I encourage readers here to Google the articles around the 1MDB scandal – allegedly associated with a Malaysian Wealth Fund , or read the book “Billion Dollar Whale” to better understand what risks & outcomes can be associated with these undertakings if not appropriately professionally managed, overseen and regulated.

I recommend readers Google “1MDB” to read about what became of this Malaysian Sovereign Wealth Fund, or if you have a real interest, I heartily recommend reading “Billion Dollar Whale”. Here the risks associated with high value wealth funds that lack the necessary oversight, professional management and independent review become readily apparent…. Lessons can certainly be learnt from a review of the outcomes referred to here..

End of comments.

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