IN the hopes of putting aside revenues derived from finite natural resources to bring about economic stability and resilience for future generations, the Namibian government today launched the Welwitschia Sovereign Wealth Fund.
The fund will provide a long-term saving strategy for Namibia, with the hopes of cushioning the economy from external economic shocks and setbacks in future.
The launch of the fund which is yet to pass in Parliament for the setting up of its legislative framework was attended by President Hage Geingob, First Lady Monica Geingos as well as ministers and other government officials.
The fund will be administrated as an independent entity from the government by the Bank of Namibia, with the Minister of Finance ensuring that the legal framework of the fund is adhered to.
The fund will acquire most of its saving monies from the country’s natural resources and the bulk of its savings will be stored in an inter-generational account, which is impossible to withdraw from, according to Penda Ithindi, the deputy director of the finance ministry.
Minister of Finance Iipumbu Shiimi shared the two objectives of the fund will be achieved through two separate and dedicated sub-accounts of the fund, namely the Intergenerational Account and the Stabilisation Account.
“The first objective, which will be served by the Intergenerational Account, is saving for future generations. In this regard, the key rationale for establishing the fund is to promote 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,” Shiimi explained.
He further noted that the second objective of the fund, which will be served by the Stabilisation Account, is fiscal and official reserve stabilization.
“This is borne out of the need to enhance national resilience by insulating the socio-economic structure against cyclical shocks as well as contributing to the macroeconomic stability objectives,” Shiimi said.
Also speaking at the occasion, the governor of the Bank of Namibia Johannes !Gawaxab said: “The recent oil discoveries come at an opportune time whereby oil revenue if managed wisely, can give our nation an opportunity for economic transformation, contribute towards economic stabilization and fairly transfer wealth across generations. A nation that comes into a large fortune must make a number of choices and trade-offs. Sound wealth management is therefore first and foremost a question of maintaining and developing the value of our productive resources.”
The governor further shared he is cognizant that it may not be feasible to set up an SWF during a time when the country is still reeling from the effects of Covid-19, high inequality, poverty, unemployment and a tight fiscal position.
He however noted that Namibians must remind themselves why this is necessary, and what the overall benefits will be to the country both in the short-run (fiscal stabilisation tool) and long-run (intergenerational wealth transfer).
NATIONAL SAVING: Some scenes from the launch of the Welwitschia Sovereign Wealth Fund. Photo: BoN