This calls for highly developed productive forces and an overwhelming abundance of material wealth. Therefore, the fundamental task for the socialist stage is to develop the productive forces. The superiority of the socialist system is demonstrated, in the final analysis, by faster and greater than under the capitalist system.
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Socialism means eliminating poverty. Pauperism is not socialism, still less communism. This is one of the most truthful characterisations of socialism, one which has been distorted over time by bourgeois and imperialist propagandists, who after their dismal failure to physically suppress the Great Socialist Revolution resorted to a concerted propaganda war against Socialism.
We provide this basic theoretical background to dismiss those who will dogmatically disassociate our proposal for a Sovereign Wealth Fund from the Marxist-Leninist-Fanonian compass that guides the EFF. Foundationally, the EFF agreed on the establishment of a Sovereign Wealth Fund, and we believe it is one of the most dynamic pragmatic considerations that should be made in the efforts to uplift South Africa and the African continent from the economic insignificance and marginalisation.
What is a Sovereign Wealth Fund? The Sovereign Wealth Fund Institute SWFI defines a Sovereign Wealth Fund as a state-owned investment fund or entity that is commonly established from balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, governmental transfer payment, fiscal surplus and receipts from resource exports. In the main, Sovereign Wealth Funds have their origin in commodity exports, either through taxes or owned by the government.
This was particularly the case with Sovereign Wealth Funds that were formed in the early s when countries in the Middle East such as Kuwait, Saudi Arabia and others with excess oil revenues. It should be noted that majority of Sovereign Wealth Funds are either future savings funds for the future generations or fiscal stabilisation funds, or both.
Oblivion of this dynamic by any nation-state is potentially catastrophic, and a sad reality. Rising commodity prices, mainly Brent crude oil and natural gas, have led to the drastic increase of Sovereign Wealth Funds assets, with at least 40 Sovereign Wealth Funds created since The largest Sovereign Wealth Funds such as United Arab Emirates, China and Kuwait have grown to the size of the largest global assets managers or biggest private equity firms.
For many non-commodities countries, Sovereign Wealth Funds particularly in the emerging markets have been at the forefront of advancing economic development and diversification to build strong national economies with solid returns. The Organisation for Economic Co-operation and Development OECD analysis of key financial actors of shifting wealth of nations duly noted that because of the nature, origin and the potential to reposition economies into a growth trajectory, concluded that such funds could usefully be considered as Sovereign Development Fund SDF.
Sovereign Wealth Funds lead investments in infrastructure and other critical areas that an annual budget of a state could not reach. Sovereign Wealth Funds are largely insulated from political micromanagement, and governance structure, investment strategy and transparency requirements are central to the drastic growth in assets. In the main, a Sovereign Wealth Fund requires a robust legal framework to promote sound institutional and governance arrangements to allow for a disciplined long-term investments strategy to generate solid returns. Others like China Investment Corporations CIC have now moved towards a mechanism for scientific decision-making and authorisation, put in place comprehensive risk management systems and developed sophisticated investment platforms to ensure Sovereign Wealth Funds are insulated from political micromanagement.
Proposals that aim to strengthen governance must not be mistaken for the absence of politicians with a developmental mandate for Sovereign Wealth Funds. Sovereign Wealth Funds with strong state-led development objectives are more sensitive to the social needs of the nation, which have high social returns, not easily observable and not attractive to the private sector. Absolute reliance on Foreign Direct Investments has proven in the history of large-scale development of nation states to be a wild goose chase.
There are virtually no countries whose massive infrastructure and industrial development were absolutely dependent on Foreign Direct Investments. What are the examples of Sovereign Wealth Funds? Statoil is a state-owned oil and gas company which invests in these sectors domestically and globally, and the returns of these investments are invested by the sovereign wealth fund and make direct contributions into the Norwegian budget, which is often characterised by budget surpluses.
The Government Pension Fund Global was set up in to underpin long-term considerations when phasing petroleum revenues into the Norwegian economy. This will be so for the foreseeable future because the assets under the Sovereign Wealth Fund are adequate to fund the country even if oil can be completely replaced as a source of revenue.
Temasek, Singapore. Temasek was formed almost 10 years after Singapore gained its independence in , and it was founded with the main objective to provide jobs and contribute to nation building when the private sector failed to mobilise capital to create jobs and build the Singapore economy. China Investment Corporation, China. No other economy in the world has led such a fast, sustained expansion by a major economy in history, as noted by the World Bank. Through trail and error, including innovation in its economic planning through Sovereign Wealth Funds, China has made great leaps in reducing poverty and reaching its goal set out in the Sustainable Development Goals SDGs , lifting more than million of its citizens out of extreme poverty.
Investment Corporation of Dubai.
Sovereign wealth funds are working to become more climate-friendly
The Investment Corporation of Dubai ICD is a state-owned holding company that can be characterised as a sovereign wealth fund owned by the government of Dubai. The Investment Corporation of Dubai has interest in 44 portfolio companies, This entails that despite earning additional revenue for the state from other parts of the world and from its oil and petroleum resources, the ICD plays an important role in the infrastructural and therefore economic development of Dubai. What are the options for SA? South Africa must within the next 24 months establish a Sovereign Wealth Fund, which should have South African characteristics and derive the best practices and lessons from the established Sovereign Wealth Funds in the world.
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Whatever form is adopted, the following features must be definitive of the fund:. It must be relatively autonomous from political micromanagement. It must directly account to Parliament, with a proviso that some of the strategic investment reports are provided in camera. The shareholders of the Sovereign Wealth Funds should be a combination of important state institutions, and certainly not a single ministry as is the case with majority of State-owned Companies.
The Sovereign Wealth Fund should develop an investment policy which brings about a delicate balance of asset management and private equity. Direct appropriation of Rbillion like CIC and guarantee its autonomy.
Significant investment shift coming as climate change reality bites
The operational costs of the Sovereign Wealth Fund should never exceed 0. It will reduce foreign exchange pressures and have a positive impact on employment. And, of course, Papua New Guinea is very rich in energy — not for nothing is it often described as a mountain of gold floating in a sea of oil and gas. And beyond gas, you have huge renewable resources, most notably solar, hydro but also geothermal power. Euromoney ANZ is selling its retail and small and medium-sized enterprise SME assets to Kina Bank and focusing on institutional and large corporate banking. Where are the big bankable projects for ANZ going forward?
In energy, the big player is local electric firm PNG Power. Where it gets challenging is in creating innovative structures around guarantees that get smaller financing off the ground.
follow site Mining and resources are well covered in that regard — the likes of the PNG LNG project is producing well above capacity. The issue is making projects bankable at the lower level, which will have a real and lasting impact on communities. We are seeing the emergence of big corporates and investors that want to focus on what they can do best. Tourism and agriculture are incredibly important, as is communication, infrastructure, food and beverage, and oil and gas. We want to be there with government and with big investors and corporates, as the economy grows, every step of the way.
Euromoney How important is it to get investment channelled into the power sector? The process will take 15 to 20 years to complete, but we are addressing the issues. When the Institute of National Affairs runs surveys in business communities, adequate, affordable and reliable power is always identified as a major constraint. The best way forward in such a large and geographically challenging country, is to localize power generation, utilizing solar and hydro and other local means.
Euromoney APEC also highlighted another fact: that the south Pacific has become geo-politicized again, for the first time in decades. JP, LI For more than seven decades in fact. Critical partners, notably Australia, have neglected the region for some time and are now racing to offset the strategic advantage held by new partners like China. That came to a head at APEC, where we took ourselves out of our comfort zone by making a huge financial, nation-building commitment to PNG. The quality of the internet is very poor here and the cost of telecommunications is exorbitant, and the current cable that connects PNG to the outside world is 20 years old and over capacity, and could fall over at any minute.
The competition between China and the West and Australia is helpful as it creates an opportunity for PNG to bring in expertise and capital. But China has been here only recently and it has changed so many things literally overnight. Euromoney Has the high cost of telecoms and a low mobile penetration rate helped or hindered the roll out of new financial services? MB, ANZ Desktop internet banking is limited in penetration, partly due to cost and partly because most people now use mobile banking services.