More funds will soon be available to South African businesses through a new national sovereign wealth fund. Also to be set up is a bank wholly owned by the South African government. President Cyril Ramaphosa announced the plans in his 2020 State of the Nation Address on Thursday evening (13 February).

“The National Treasury and the SA Reserve Bank are working together to ease pressure on business and consumers.

“We have decided to establish a sovereign wealth fund as a means to 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,” the president said.

“We are also proceeding with the establishment of a state bank as part of our effort to extend access to financial services to all South Africans.”

Here Is All You Need To Know

• South Africa’s Finance minister Tito Mboweni is expected to give more details on the plans in his Budget Speech later this month, Ramaphosa said.
• In July 2019, Mboweni announced that deputy minister David Masondo had been given the responsibility to start the process of forming a state bank.
• While the minister did not go into any detail about what this process would entail, he said that the establishing of a state bank was necessary.

Read also:Business Owners In South Africa Must Now Complete A List Of 24 Questions — or Face Jail Time

“It’s a matter of responding to a cry among our people — and that cry fundamentally has to do with the discriminatory nature of the standing banking institutions,” the minister said at the time.

• 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, or in alternative investments such as private equity fund or hedge funds.
• The position to forge ahead with the establishment of a state bank comes counter to warnings from South Africa’s National Treasury itself that such an institution could be a massive liability that the country can ill-afford.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com