The EFF, led by Julius Malema, wants to set up a R100bn sovereign wealth fund within the next year as a means of creating jobs and combating illicit financial flows, tax avoidance and base erosion.
The fund would be established in partnership with “foreign direct investors”, through a special appropriations bill in the 2025/26 budget, according to the party’s election manifesto. The fund will mainly be capitalised through the allocation of key shares of SA’s mineral and petroleum resources.
A sovereign wealth fund is a state-owned investment fund, often derived from a country’s surplus reserves. Countries such as China, Singapore, Norway and Kuwait all have established sovereign wealth funds.
“The EFF government will create a national sovereign fund to manage and invest a portion of foreign exchange reserves, aiming to generate sustainable revenue for the country while protecting against currency volatility,” the manifesto reads.
The establishment of a sovereign wealth fund had previously formed part of the ANC’s policy proposals but the idea has since fallen through the cracks amid SA’s worsening fiscal constraints and spending priorities.
In his 2020 budget speech, former finance minister Tito Mboweni suggested that an SA sovereign wealth fund could be funded from sources such as allocation of spectrum and mineral rights royalties. The target capital for the fund was R30bn. In the same year, the Treasury said that it was conducting a feasibility study for a sovereign wealth fund, which could “possibly” be capitalised from the allocation of spectrum and the sale of noncore assets.
Since 2008, the debt ratio has risen by more than 47 percentage points of GDP. Gross debt is set to exceed R6-trillion by 2025/26, up from R4.8-trillion now. Treasury previously said its fiscal strategy aims to narrow the budget deficit, stabilise debt and ensure fiscal sustainability through spending cuts, revenue measures and additional borrowing by 2025/26, the same year in which the EFF plans to establish the fund.
The EFF’s proposal to establish the sovereign wealth fund is in line with the party’s socialist policies, including greater state participation in key sectors of the economy and implementing land expropriation without compensation.
Coal power
The 248-page manifesto, which was unveiled by Malema in eThekwini on Saturday, also calls for the end of private participation in Eskom, including halting the separation of the power utility into separate generation, transmission and distribution entities.
“The EFF government will enhance technical capacity by collaborating with China and other friendly nations to repair and restore coal power stations,” Malema said.
“The EFF government will engage with strategic partners to build a nuclear power plant in SA through a transparent procurement process. This facility is planned to produce between 3,000MW and 6,000MW of electricity, under a 20-year build-operate-transfer contract. This initiative will not only augment SA’s electricity generation capacity but also symbolise a significant step towards energy independence and sustainable development,” Malema said.
A recent poll by market research firm Ipsos shows ANC electoral support falling to 38.5% in the 2024 national and provincial elections, from 57.6% in 2019 and 45.59% in 2021.
The poll, conducted from October to December 2023, also shows that the EFF, the third-largest biggest party by seats in the National Assembly, is poised to shoot past the DA as official opposition, or second-largest party.
However, the EFF, which celebrated its first decade in 2023, believes that it will win the elections.
“We are in the 2024 elections for nothing else but to win,” Malema told party supporters at the Moses Mabhida Stadium.
“The EFF is going to create 9-million jobs through stopping load-shedding because we believe through industrialisation we can create jobs, but we cannot industrialise if we still have load-shedding. Therefore, the government of the EFF is committing to end load-shedding within six months in government because we know it is possible.”
The EFF also plans to widen the government’s social welfare programme by introducing a graduates fund of R1,000 for people with qualifications up to matric who cannot find employment. Those with a postmatric qualification without employment would receive R3,000-R4,000 a month from the state.
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