Why SA should cultivate a new legacy
The best time to plant a tree was 20 years ago, the second best time is now — so the Chinese proverb goes. Those who plant trees do so with the knowledge that even though they may not enjoy the tree at its full height, others will enjoy its full splendour.
In battling the challenges South Africa faces now, the focus should be not only on solving our current problems but on building a legacy for future generations.
Which is why the proposal by the EFF to establish a sovereign wealth fund has great merit.
One of the most well-known funds of this kind is the Government Pension Fund Global (which is not a pension fund despite the name), more commonly known as the oil fund, that is run by Norway. It now has a value of about $1-trillion (about R11.6-trillion).
According to Sovereign Wealth Fund Rankings, as of January, the second-largest fund is owned by China, with a value of $900-billion, followed by funds in the UAE, Kuwait and Saudi Arabia.
It’s not hard to figure out where this wealth is derived from.
Four out of the top five sovereign wealth funds are based on oil revenue, and of the more than 90 wealth funds ranked, many originated from revenue derived from black gold or mineral wealth.
Among the few funds in Africa that are ranked, Botswana’s Pula Fund, built from diamond and mineral revenue, is valued at $5.7-billion, while Angola’s is at $4.6-billion and Nigeria’s two funds are at a combined $2.9-billion.
The purpose of sovereign wealth funds varies, but they are generally an acknowledgement that finite resources such as oil will run out one day. The Norwegian fund now has investments in 9 000 companies in mostly developed economies.
Such funds could, for example, protect an economy from volatility in the price of a key export that a country relies on heavily, or fund economic development projects.
In Norway a small percentage of the fund is paid to the national budget, while in Botswana, the fund forms part of the country’s foreign-exchange reserves.
Sovereign wealth funds are savings for future generations. An inheritance, you could say, which needs to be safeguarded and grown for the next generation.
But in South Africa, with a hole in revenue, high national debt and mounting interest charges on that debt, there is no scope to save. The consequences of the decisions that have led us to our current financial situation will be borne by citizens who themselves will now have even less opportunity to provide any cushion for their children.
A commitment to invest in a back-up plan — a long-term project that you, either as a citizen or as a government, would likely derive no benefit but would provide stability for the future — also requires a new moral compass.
A legacy should not only be about the infrastructure or the money we put away for the future.
It should also be about recalibrating our national character. If you serve in government, you do so with honesty; if you are in business, you conduct yourself with integrity; and, as citizens, we offer respect and consideration to each other.
Even a small contribution now to a South African sovereign wealth fund could in 20 years give our children greater confidence in coping with the headwinds that will inevitably come their way.