South Africa has announced plans to establish a $2 billion Sovereign Wealth Fund (SWF), drawing funds from the sale of state assets, gas royalties, and other sources of income.
Possible funding for the SWF will be drawn from allocation of spectrum, mineral royalties and petroleum, so as to ensure that we continue to invest in the future generations in a sustainable way.
South Africa’s Minister of Finance, Tito Mboweni
This comes even as the country is still wallowing in debt and a budget deficit set to widen to 6.8% in the coming fiscal year.
However, the bill is subject to approval from the country’s National Assembly.
A sovereign wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals. Most of the wealth funds are financed by revenues from commodity exports or foreign-exchange reserves held by the central bank.
Other African countries that have established a sovereign wealth fund are Gabon, Senegal, Algeria, Botswana, Nigeria, Uganda, Namibia, Mauritania, Libya, Ghana, Equatorial Guinea, Angola, and Rwanda.
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