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Adri Senekal de Wet, the Editor of Business Report.
CAPE TOWN – A sovereign wealth fund (SWF) is a state-owned investment fund that invests in real and financial assets such as stock bonds, real estate, precious metals or in alternative investments such as private equity fund or hedge funds, according to Wikipedia.
SWFs invest globally and most are funded by revenue from commodity exports or from foreign exchange reserves held by the central bank. Some sovereign wealth funds may be held by a central bank, which accumulates the funds in the course of its management of a nation’s banking system.
This type of fund is usually of major economic and fiscal importance.
Other SWFs are simply the state savings that are invested by various entities for the purposes of investment return, and that may not have a significant role in fiscal management.
The accumulated funds may have their origin in or represent foreign currency deposits, gold, special drawing rights and IMF reserve positions held by central banks and monetary authorities with other national assets such as pension investments, oil funds, or other industrial and financial holdings.
I urge the Minister of Finance, Malusi Gigaba, to consider such a fund.
Adri Senekal de wet is the Executive Editor at Independent Media Business Report.