At the stroke of a pen — and without a significant injection of new capital — the government could create a powerful, sustainable mechanism to channel wealth towards South Africa’s poor and disadvantaged.
I propose the establishment of a sovereign wealth fund, structured to capture and grow the value of public assets and private sector participation for the long-term benefit of all South Africans.
The government owns an enormous portfolio of land and other assets, much of which is not essential to the delivery of its core functions. A substantial portion could be transferred to the fund and professionally managed.
For example, the Athlone power station in Cape Town has effectively been mothballed for decades. Rather than allowing the valuable land and infrastructure to remain underutilised, it could be sold or redeveloped into a major mixed-use development, creating an asset of significant economic value.
In addition, the current BEE system should be reconsidered and potentially replaced with a mechanism that creates genuine broad-based ownership. One option would be to require listed companies to allocate a defined percentage of their equity to the sovereign wealth fund. Private companies could contribute based on a percentage of turnover or another appropriate measure.
This would create a direct and measurable mechanism through which South Africans as a whole could participate in the wealth generated by the economy.
Many business owners may also prefer such a system to the current BEE framework, which can be complex and costly.
However, a sovereign wealth fund of significant size would inevitably become a tempting target for political interference, patronage and corruption.
Its assets, governance structures and investment decisions should be protected by legislation and constitutional safeguards. Highly qualified, independent professionals should manage the fund and strong checks and balances should be put in place. Full transparency, independent auditing and meaningful parliamentary and public oversight would be critical.
Ken Kinsey-Quick, Franschhoek
