President Hage Geingob on Wednesday said the country’s much-awaited Sovereign Wealth Fund will be launched in May this year.
Several countries across the world are establishing Sovereign Wealth Funds – a state-owned investment fund composed of money generated by the government, often derived from a country’s surplus reserves invested for the benefit of a country’s economy and its citizens. According to Global SWF, African Sovereign Wealth Funds are worth an estimated US$16.4 billion.
Delivering his 8th State of the Nation Address (SONA) Geingob said the fund, dubbed the Welwitschia Fund, will have an initial capital injection of N$300 million.
However, it is not clear if the seed capital would be proceeds from Bank of Namibia N$413.7 million dividend, which the apex bank indicated the government had agreed to use a portion of the dividend for the fund or it will come from elsewhere.
“To safeguard the welfare of current and future generations, we have established, amid a recession, Namibia’s first Sovereign Wealth Fund. The framework for this Fund, called the Welwitschia Fund, is completed,” the President said.
The announcement by Geingob comes after a shift in the launch dates, with Finance Minister Iipumbu Shiimi having announced in October last year plans by the government to set up the Fund before the end of 2021.
Namibia’s Sovereign Wealth Fund, structured into short and a long-term, will have a balanced mandate where 70% of the assets bought are risky assets such as equities while the rest are fixed income assets, real estate and private equity.
About 2.5% of the intergenerational fund will be invested in infrastructure projects with socio-economic benefits for future generations.
Government aims to set up the Fund with financing from savings, proceeds from the green renewable sector, mining royalties, fishing quotas, divestiture of state-owned enterprises as well as Southern African Customs Union receipts.
Government had initially mulled the possibility of using 50% of proceeds from the Mobile Telecommunications Limited (MTC) Initial Public Offering (IPO) totalling N$1.27 billion as seed capital to kick start the much-anticipated.
Hyphen Hydrogen Energy, which has won two bids to construct Namibia’s inaugural green hydrogen projects, has also committed 2.5% of the annual revenue to be generated from the project to go to the Sovereign Wealth Fund.
