The South African Communist Party (SACP), one of the African National Congress (ANC) alliance partners, has welcomed President Cyril Ramaphosa’s decision to create the Sovereign Wealth Fund.
It is a state-owned investment fund that would invest in financial assets like bonds and mineral resources.
While Congress of SA Trade Unions (Cosatu) is still to make its position clear after its Central Executive Committee meeting planned for next Monday, the SACP says the fund will hold equity stakes in companies on behalf of the nation – instead of individuals doing so through Black Economic Empowerment (BEE).
The party’s spokesperson Alex Mashilo says the fund will accumulate revenue for the country’s development.
Examining whether Sovereign Wealth Fund will work for South Africa, Senior research Lebohang Pheko giving more detail :
On Saturday Chief Economist at Stanlib Kevin Lings said the government needs to provide clarity about its decision to establish a sovereign wealth fund.
President Cyril Ramaphosa made the announcement during his State of the Nation Address (SONA) in parliament on Thursday.
But he did not provide details on how the fund would be financed.
Lings says the country already has some agencies that are equipped to develop South Africa, making a sovereign wealth fund unnecessary.
“So if you look at countries that have sovereign wealth fund, they tend to be able to put proceeds from oil. So if you look at Norway they have a big sovereign wealth fund all coming from oil. We don’t have that type of proceeds.”
The Sovereign Wealth Fund continues to generate debate: