President Cyril Ramaphosa has defended his announcement that South Africa would look to establish a sovereign wealth fund as a bold step to invest in the country's future.
During his State of the Nation Address last week, the president said the creation of such a fund would "preserve and grow the national endowment of our nation, giving practical meaning to the injunction that the people shall share in the country’s wealth".
His announcement prompted mixed reactions, with some business lobby groups questioning its usefulness, while the Economic Freedom Fighters urged Ramaphosa to establish the fund without delay. Critics fear the wealth fund may take up scare state resources and attention at the expense of urgent priorities such as Eskom.
Ramaphosa responded to critics in Parliament on Thursday, saying government was "taking bold steps to hold the economy in good stead for the future".
"Our decision to set up a sovereign wealth fund, even at a time of great economic difficulty is an exercise in showing our commitment to growing South Africa for future generations," Ramaphosa said. His words echo remarks made by Mineral Resources and Energy Minister Gwede Mantashe earlier on Thursday. Addressing journalists in Cape Town, Mantashe said it would be wrong to delay the delaying the creation of the fund.
Progress despite 'grave' challenges
Ramaphosa said he was well aware of the pressing challenges South Africa faced, including the financial, operational and governance challenges at debt-laden power utility Eskom. However, he said the wealth fund would contribute to long-term stability while government addressed its immediate challenges.
"Despite the grave challenges we face, we are making progress. We are not running from our problems. We are acknowledging them, we are confronting them, and we are establishing a foundation for growth.
Finance Minister Tito Mboweni is expected to provide more information about the scope and mandate of the fund when he presents the Budget next week.