South Africa to Establish $2 Billion Sovereign Wealth Fund

South Africa has announced that it will use money from the sale of broadband spectrum and mining royalties to establish a 30 billion-rand ($2 billion) sovereign wealth fund, according to the country’s Finance Minister,Tito Mboweni.

Its establishment was first mooted at least 10 years ago.
The proposed fund comes at a time when Africa’s most industrialised economy is struggling to contain rising debt amid sluggish economic growth and a budget deficit projected to widen to a near three-decade high of 6.8% in the coming fiscal year.

Mboweni says the legislative framework for the fund will be submitted to the parliament.

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Funding will come from the government’s plans to sell broadband spectrum this year, along with royalties from petroleum, gas and mineral rights, as well as the sale of non-core assets, future surpluses and savings.

The government is also pressing ahead with plans to form a state bank that will operate as a retail financial institution premised on commercial principles, he said.

However, the Reserve Bank is yet to grant the proposed lender an operating license.

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