Wealth fund details still sketchy
Details on where the money for Namibia's recently announced sovereign wealth fund will come from are still scant.
06 July 2020 | Economics
Apart from a cabinet announcement that the establishment of a sovereign wealth fund has been approved in principle, details on where money for the fund will come from are still scant. A week after cabinet approved finance minister Iipumbu Shiimi's proposal for the fund, further details could still not be shared.
When contacted for comment, finance ministry spokesperson Tonateni Shidhudhu said the ministry is still waiting for cabinet to give them written confirmation.
“Only then will we be able to provide detailed information regarding what exactly the proposed fund will entail,” he said.
Cabinet gave the ministry the directive to compile an “inter-institutional team” to present a fitting model and implementation strategy, information minister Peya Mushelenga said in a statement.
Usually, investments for sovereign wealth funds come from central bank reserves, income from natural resource exports such as oil, privatisation profits and foreign exchange transactions.
Mineral-rich countries, in particular, are setting up sovereign wealth funds, with most of the money coming from the proceeds from oil and natural gas exploration.
Similar funds elsewhere
According to the Sovereign Wealth Fund Institute, these fossil fuels were the source of 60% of wealth funds. The oil-rich countries of the Middle East have hundreds of billions of dollars to invest in large pools abroad.
Struggling US banks turned to many of these wealth funds during the 2008 financial crisis.
Countries known for their sovereign wealth funds are Norway, which has invested some of its oil industry profits, as well as Russia and the United Arab Emirates.
Despite making an announcement in 2010, South Africa has yet to set up a sovereign wealth fund, with president Cyril Ramaphosa mentioning it again in his state of the nation address this year.