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(NEWZIMBABWE) Govt plans sovereign wealth fund: Kasukuwere

COMMENT - Eric Bloch? Neoliberals are not your 'go to guys' for advice on economics or finance.

Govt plans sovereign wealth fund: Kasukuwere
by NewZiana
02/06/2011 00:00:00

THE government is in the process of setting up a Sovereign Wealth Fund (SWF) in line with global trends to ensure that future generations benefit from mineral resources being mined today, a cabinet Minister said on Wednesday.

A sovereign wealth fund is a state owned investment fund composed of revenue generated from exports of natural resources, Zimbabwean news agency, New Ziana reported. SWFs are not a new phenomenon with Kuwait having created its own in 1953 from oil revenue. The Kuwaiti fund is now worth an estimated US$250 billion.

Youth Development Indigenization and Economic Empowerment minister, Saviour Kasukuwere told New Ziana that the government wanted to save proceeds of exhaustible resources for future generations.

"That is what we are doing at the moment. It will be operational as soon as it is practical," he said.

"We cannot exploit all the resources today. We must save something for future generations," he added.

Economist Innocent Makwiramiti concurred with Kasukuwere, saying despite the challenges that the country was facing it was imperative that government created the fund.

Makwiramiti added that the initiative would ensure mutual beneficiation on the part of the mining companies, present and future generations.

"The idea by government to create a sovereign wealth fund is a good move," he said.

"It is a worthy investment because we have to invest in the future despite the challenges we are facing at the moment investing in the future means foregoing present challenges," Makwiramiti said.

"We have vast mineral resources countrywide which have a lifespan so it will only be wise to save revenue derived from their sales before they run out," he said.

However, another Economist Erich Bloch was of a different opinion saying the move was likely to hinder full recovery of the mining sector.

"At this point in time it is not necessary it will be most unwise.

"Setting up a sovereign wealth fund is merely another burden on the mining sector which will make it less profitable and will also discourage investment," he said.
African counties which have SWFs include Botswana, created in 1996 and based on its diamonds and mineral revenue.

The fund is now worth an estimated US$6, 9 billion.

Labels: SAVIOUR KASUKUWERE

posted by MrK @ 5:31 PM