SACP welcomes plan to set up sovereign wealth fund
The party wants the fund to hold equity stakes in companies on behalf of the nation, rather than individuals doing so as a result of BEE
The SACP has welcomed the announcement by President Cyril Ramaphosa in his Thursday state of the nation address (Sona) that a sovereign wealth fund will be created.
The idea was first proposed by the party, which believes it can hold equity stakes in companies on behalf of the nation, rather than individuals doing so as a result of BEE.
However Intellidex head of capital market research Peter Attard Montalto has slammed the proposal as “a crazy idea when there is a current-account deficit that is persistent and no spare money lying around. It does make sense in the very long term to benefit from hard currency generated by oil and gas exploration, but that is a 10-year plus narrative. We see a shell entity doing little in the interim”.
Sovereign wealth funds are state-owned investment funds that invest in real and financial assets, such as stocks, bonds, real estate, and precious metals; or in alternative investments, such as private equity funds or hedge funds.
Most sovereign wealth funds in other parts of the world are funded by revenues from commodity exports or from foreign-exchange reserves held by the central bank. They are typically created when governments have budgetary surpluses and have little or no international debt — which is not the case in SA, which is moving towards a budget deficit well over 6% of GDP.
SACP deputy secretary-general Solly Mapaila said in a speech at the Cape Town Press Club on Friday that he envisages the sovereign wealth fund being the repository of state-owned investments in all sectors of the economy.
“It is an important fund that can lead strategic investments by the country in important areas where we have perhaps not invested enough. This is a fund that many countries in Europe, especially Scandinavian countries, have used to accumulate revenue to look after the country’s interest.”
Mapaila did not see the sovereign wealth fund duplicating the state’s investment in state-owned enterprises (SOEs).
He said the SACP strongly condemns the disruption by the EFF of Ramaphosa’s Sona. Parliament needs to amend its rules so that it can act decisively to prevent such abuse, he said, adding that the slurs with racial undertones flung at public enterprises minister Pravin Gordhan were completely unacceptable.
The SACP supports Gordhan, particularly for his combat against state capture and other forms of corruption, which has elicited a fight-back campaign by those who benefited from it.
The SACP, he said, also supports Ramaphosa’s announcement of increased public investment in strategic and social infrastructure, which would help turn around the economy and address unemployment. Mapaila emphasised the need for further investment in Technical Vocational Education and Training (TVET) colleges, something he said was missing from Ramaphosa’s speech.
He welcomed the announcement of further investment in rail infrastructure in Gauteng and the Western Cape, but noted that the entire rail transport system across the country needs to be upgraded.
Mapaila also reiterated the SACP’s call for a second financial sector transformation summit, which he said is long overdue, and expressed the party’s support for the establishment of a state bank that was also announced by Ramaphosa.