Govt committed to sovereign wealth fund, but now's not the right time - Ramaphosa
Answering questions in the National Assembly on Thursday afternoon, Ramaphosa said given the country’s many pressing demands, the establishment of a sovereign wealth fund is still some years away.
President Cyril Ramaphosa delivers his State of the Nation Address in Parliament on 11 February 2021. Picture: GCIS
CAPE TOWN - President Cyril Ramaphosa says while government is committed to building a sovereign wealth fund, now is not the right time.
He said rather than trying to build this fund from mineral exploitation, it would be better to do so from state-owned companies.
Answering questions in the National Assembly on Thursday afternoon, Ramaphosa said given the country’s many pressing demands, the establishment of a sovereign wealth fund is still some years away.
Ramaphosa said the National Treasury has been considering ways in which a sovereign wealth fund can be started.
However, unlike other nations that use their natural resources for this purpose, South Africa already extracts taxes and royalties from private mining houses.
“Rather than take money from the fiscus, money that is always utilised to fund a whole range of initiatives, that government embarks upon, it would be good to set aside money, some of which could come from royalties.”
Ramaphosa said once state-owned companies perform better, they will be a more viable option.
“By agglomerating various state-owned enterprises that are going to start working better, as we move on, and make quite a lot of profit, we argue that that gives us a platform and the foundation to build a sovereign wealth fund.”
Ramaphosa said while the country’s fiscal position doesn’t make it an ideal time to establish a sovereign wealth fund - work should continue to realise this goal.