Namibia eyes sovereign wealth fund

3 Jul 20

Namibia is looking to set up a sovereign wealth fund to secure savings for its future, the country’s government has said.

The state-owned investment fund will, if established, set aside money the government can use during crises or to deal with unexpected drops in revenue to finance its budget commitments.

“Cabinet approved in principle the immediate establishment of a sovereign wealth fund, and Cabinet directed the Ministry of Finance to constitute an inter-institutional team to finalise the appropriate model and implementation of the sovereign wealth fund for Cabinet’s consideration and approval,” said ICT minister Peya Mushelenga.

Namibia’s exports include diamonds and other minerals, and it is common for commodity-rich countries to set up stabilisation funds that manage revenues, saving proceeds during periods of high sales and paying out to the government when receipts drop.

These types of funds tend to hold more of their assets in liquid investments so they are easier to draw upon, but the form of Namibia’s proposed fund has not yet been detailed publicly.

The African country’s economy, like many others, has been hit hard by Covid-19.

When the budget was presented to parliament in early June, prime minister Saara Kuugongelwa-Amadhila said her government faced “enormous” challenges.

“Our economy has not escaped the negative impact of the Covid pandemic, and it will without doubt affect the economic outlook, as is the case globally,” she added.

She said enacting economic reforms, looking to public-private partnerships and continued spending on education would help see Namibia through the crisis, and she expects the finance minister to come back with “further interventions” in a midterm review of the budget.

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