Cyril Ramaphosa

South African President, Cyril Ramaphosa, has proposed setting up a sovereign wealth fund to help boost economic growth and his ruling African National Congress (ANC) backs the plan, two senior party officials said on Tuesday.

Ramaphosa, who replaced scandal-plagued Jacob Zuma as ANC leader in 2017, is trying to rekindle growth before next year’s national election.

There were no immediate details on where the money for the fund would come from. Most sovereign wealth funds utilise revenues from oil and gas exports.

South Africa does not have significant energy deposits, but has a large, albeit struggling, mining industry.

The idea of setting up a sovereign wealth fund, which other emerging markets such as Russia use to lift growth at times of weak commodity prices, was dropped by South African officials several years ago when commodity prices plunged.

“We support the idea put forward by the president on the creation of a sovereign wealth fund,” ANC Deputy Secretary General, Jessie Duarte, said on Tuesday.

“It’s another mechanism to ignite our economic prospects.”

South Africa’s economy has performed poorly this year in spite a short-lived pickup in business and consumer conference around the time that Ramaphosa replaced Zuma as ANC leader.

Economists are skeptical that South Africa – a major producer of commodities such as gold and coal – could easily set up a sovereign wealth fund given its large budget deficit and shrinking mining sector.

Zizi Kodwa, a member of the ANC’s National Executive Committee, said that it would be government to decide which revenues to use to set up the fund.

“South Africa has a lot of mineral wealth, but it’s not up to the ANC to decide where to take the money from,” Kodwa said.

“A sovereign wealth fund could be an important source of stimulus, that is what we are saying.”

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