Talk of a sovereign wealth fund (SWF) has been gaining traction in recent years, and more so in the past two months. And in recent weeks a remarkable Twitter spat broke out between finance minister Tito Mboweni and EFF deputy leader Floyd Shivambu over who owns the idea.
President Cyril Ramaphosa in his state of the nation address left no doubt as to which party would have the stronger ownership claim.
"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," he said, obliging Mboweni to drop a paragraph about it into his budget speech.
Inevitably there was little detail about the sources of the initial funding — a modest R30bn. "There are a variety of possible funding sources such as the proceeds of spectrum allocation, petroleum, gas or mineral rights royalties, the sale of noncore state assets, future fiscal surpluses and money we set aside," said Mboweni, rather smartly linking the establishment of an EFF-backed project with the more controversial prospect of selling noncore state assets, which he defines quite broadly.
The DA’s finance spokesperson Geordin Hill-Lewis sums up the general mood of scepticism: "It’s a sop, I’m afraid it will not be implemented in any meaningful way; there’s no money and no surpluses to fund it."
Alan Hirsch, of the Nelson Mandela School of Public Governance, supports the concept of an SWF but believes that now is not the appropriate time.
"An SWF is for the good times when you set aside funds to stabilise monetary and fiscal conditions; it’s not relevant to our times," says Hirsch, adding that the idea should have been pursued over a decade ago, when commodity prices were strong and SA ran a budget surplus.
A critical factor will be how the fund is set up and managed, says Hirsch. "If it is done with the same discipline and expertise evident at the National Treasury and the Reserve Bank that would be OK, otherwise it would be a waste."
One political analyst remarks that the timing is unfortunate given the low levels of trust in the government and the suspicion that an SWF could be used as another feeding trough by the politically well-connected.
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