PRESIDENT Cyril Ramaphosa has announced the establishment of a sovereign wealth fund to help preserve and grow the national endowment and give what he said is practical meaning to the sharing of the wealth.
THE sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds.
Ramaphosa made the announcement during his State of the Nationa Address which was disrupted by the EFF who has beef with him for not firing Public Enterprises Minister Pravin Gordhan.
The president said it was time to fix public finances and reduce government spending.
“We cannot continue along this path. Nor can we afford to stand still.
“Low levels of growth mean that we are not generating enough revenue to meet our expenses, our debt is heading towards unsustainable levels, and spending is misdirected towards consumption and debt-servicing rather than infrastructure and productive activity,” he said.
Ramaphosa committed that Finance Minister Tito Mboweni will outline a series of measures aimed at reducing spending and improve its composition when he tables his budget in two weeks’ time.
He pointed out that prioritizing resources more effectively and improving the efficiency of tax collection would help stabilizing public finances. He said the government was working with unions to contain the public wage bill.
“Achieving sustainability will ultimately require us to address structural challenges in the economy that raise the cost of living and doing business.
“By working with the Auditor-General to reduce irregular expenditure, by shifting government spending from consumption expenditure to investment in infrastructure, we aim to improve the state of public finances.
“The National Treasury and the SA Reserve Bank are working together to ease pressure on business and consumers,” he said.
He said the government was going ahead with the plan to establish a state bank in efforts to extend access. To financial services to all South Africans. Again Ramaphosa said Mboweni will provide further details during his budget speech.
“We will be undertaking far-reaching economic reform measures that we will include those contained in the paper produced by National Treasury, entitled ‘Economic Transformation, Inclusive Growth and Competitiveness’.
“This year, we are moving from the stabilisation of state-owned enterprises to repurposing these strategic companies to support growth and development,” he said
Ramaphosa said following years of state capture, corruption and mismanagement, the government was working to ensure that all state owned enterprises were able to fulfil their developmental mandate and be financially sustainable.
“In consultation with the Presidential SOE Council, we will undertake a process of rationalisation of our state owned enterprises and ensure that they serve strategic economic or developmental purposes.
“The extent of capture, corruption and mismanagement in SOEs is best demonstrated at South Africans Airways, which was placed in business rescue late last year,” he said
To strengthen the capacity of the state and increase accountability, the president said, he will be signing performance agreements with all ministers before the end of this month.
“These agreements – which are based on the targets contained in the Medium-Term Strategic Framework – will be made public so that the people of South Africa can hold those who they elected into office to account.
“We see these performance agreements as the cornerstone of a new culture of transparency and accountability, where those who are given the responsibility to serve – whether as elected office bearers or public servants – do what is expected of them.
“It is a culture where corruption, nepotism and patronage are not tolerated, and action is taken against those who abuse their power or steal public money,” he said.