Not a favourable time to establish a sovereign wealth fund: Ramaphosa

President Cyril Ramaphosa says one way of establishing a sovereign wealth fund is through the reform and consolidation of State-Owned Enterprises (SOEs).

Ramaphosa was answering questions in the National Assembly during his oral reply session.

He says with the current fiscus position of South Africa and its focus on service delivery, South Africa cannot establish a sovereign fund at this stage.

Ramaphosa says there are various options with some countries relying on SOEs.

He says other countries use revenue from the exploitation of their natural resources to establish and sustain sovereign wealth funds.

“In our country, however, public revenues or royalties that we derive from mineral resources have historically not been very reliable or have not been very consistent. We, therefore, suggested that one of the possible routes towards the establishment of a sovereign wealth fund is through the reform and consolidation of State-Owned Enterprises. This is the route that a number of countries have used and the one example I got to know of is Singapore, through Temasek, Dubai or the UAE through their Investment Dubai Fund.”

Ramaphosa says currently it is not the favourable time for South Africa to establish a sovereign wealth fund.

“It is currently not the most opportune and favourable time for us to establish a sovereign wealth fund. However, there are a number of options that are under consideration. Funding for service delivery remains under pressure for us. Additional resources are required to improve the recruitment of key personnel such as police and teachers. We also need to increase investment in the maintenance of basic service maintenance or infrastructure rather. In light of these realities, the most appropriate policy path is to use any additional resources, at their moment to reduce the debt burden that our country carries and improve the delivery of service.”

 

President Cyril Ramaphosa is currently appearing before the National Assembly to answer Questions for Oral Reply.

Under section 92 of the Constitution, Members of the Cabinet are accountable to Parliament for the performance of their functions and the exercise of their powers… pic.twitter.com/eXyQrX0bHk

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Members of Parliament listening to the responses from President Cyril Ramaphosa during today’s Oral Reply. Photographer: Phando Jikelo / Parliament of the RSA pic.twitter.com/OZJk5sw2uT

— Parliament of RSA (@ParliamentofRSA) August 29, 2024