The Bill of the much-anticipated creation and implementation of the Welwitschia Sovereign Wealth Fund, that is sought to boost the country’s economic recovery and also serve as a solid foundation that can back up the country’s economy, will be tabled in parliament in 2024.
The Minister of Finance and Public Enterprises Iipumbu Shiimi said a technical team is finalising inputs into the draft bill from stakeholders, after which the approval processes will commence.
“We aim to table the bill before Parliament in FY2024/25. In terms of capitalisation, the Fund remains with the initial seed capital of N$300 million. Given the need to maintain fiscal sustainability, it is not possible at this point to further capitalise the Fund from the current revenue streams without increasing debt. Accordingly, the draft bill will include the necessary provisions and stop-gap measures to ensure that the Fund is capitalised in a fiscally sustainable manner,” Stressed Shiimi, when he tabled the N$84.6 billion national budget.
The Wealth Fund was officially launched in May 2022, with the purpose of promoting an intergenerational prosperity for all Namibians by ensuring that the distribution of benefits flowing from exploiting the country’s natural resource endowments is shared across generations.
Royalties from the sale of natural, renewable and non-renewable mineral resources, taxes, divestiture from public investment holdings and contributions from certain state-owned enterprises will finance the fund.
Furthermore the Fund is expected to strengthen Namibia’s fiscal stability and resilience to the external shocks that stem from Namibia’s interconnectedness with the global economy.
The fund will have multiple investment accounts which will include a stabilization and intergenerational savings, of which investments in these will vary focusing on low risk and medium-term with a maturity age of between three to 10 years.
A combination of streams, including a portion of royalties collected from the sales of natural, renewable and non-renewable mineral resources, taxes, divestiture from public investment holdings as well as contributions from identified state-owned enterprises and other parties.
The target is mainly on the recent massive oil discovery and the green hydrogen, where a portion of the revenue generated will be directed towards the Sovereign Wealth Fund.
Hyphen Hydrogen Energy, which has won two bids to construct Namibia’s inaugural green hydrogen projects, has committed 2.5% of the annual revenue to be generated from the project to go to the Fund.
The Bank of Namibia is currently housing the fund, a stop-gap measure while the ministry pushes ahead with drafting the Sovereign Wealth Fund law, which aims to provide a clear framework that outlines the responsibilities of various stakeholders.
The United Nations estimates that African SWFs have combined assets of US$159 billion compared to an estimated US$10 trillion for all global SWFs.
African SWFs are largely funded from surpluses from commodity exports and about half of all African SWFs were created within the last decade according to the United Nations.
