Cape Town – President Cyril Ramaphosa has affirmed the government’s commitment to establishing a Sovereign Wealth Fund to benefit future generations but noted that current conditions are not favourable for its immediate creation.
Ramaphosa was responding to questions for oral reply in the National Assembly in Cape Town on Thursday, marking his first session under the Government of National Unity.
He explained that the government is working on the necessary framework to build the fund, which would invest surplus national wealth in economic and social development projects.
“We are committed to create a Sovereign Wealth Fund and we believe that the architecture that we are putting together now will be able to assist us in building a Sovereign Wealth Fund. This we will be doing for future generations because it takes quite a while to build a facility like a Sovereign World Fund.
Honourable Members,
Sovereign wealth funds are used by many countries around the world to harness national resources for economic and social development.
They are often used to preserve and grow the country’s wealth for the benefit of future generations.
In a document… pic.twitter.com/mAsQjPe2aq
— Cyril Ramaphosa 🇿🇦 (@CyrilRamaphosa) August 29, 2024
“While conditions do not currently exist for the immediate establishment of a Sovereign Wealth Fund, this is an objective which we should continue to work towards. Such a fund could help to ensure that the national wealth of our country is effectively used to support economic and social development for years to come,” the president said.
Ramaphosa highlighted that such funds are used globally to harness national resources and grow a country’s wealth for the benefit of future generations.
However, South Africa’s current fiscal constraints, including significant budget deficits and a high debt burden, make it challenging to establish the fund now.
Instead, the government prioritises using additional resources to reduce national debt and improve service delivery, such as recruiting essential personnel and maintaining infrastructure.
Ramaphosa also discussed ongoing efforts to attract private sector investment to enhance ports, railways, and other infrastructure to boost economic growth.
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Compiled by Betha Madhomu
