Vodacom sale proceeds to fund SA’s first Brics bank payment
The government will fund its first payment towards the Brics bank from the sale of its Vodacom shares.
Questions about how the government would finance the payments have swirled since South Africa announced its participation in the bank‚ especially as the February budget made no allocation for it.
However‚ on Wednesday Finance Minister Nhlanhla Nene announced that the remainder of the approximately R25bn made from the sale of its 13.8% stake in Vodacom in July‚ would be used to make the first payment.
The New Development Bank of the Brazil Russia, India, China and South Africa bloc requires all participating nations to contribute $10m each.
However‚ only 20% or $2bn (approximately R26.8bn at current exchange rates) of this needs to be paid upfront‚ with the remaining 80% to be made available only when called upon.
The $2bn will be paid in seven tranches. The first‚ totalling approximately R2bn‚ is due soon.
The bank will be headquartered in China but Johannesburg will host a regional office.
It is envisaged that it will fund development projects at preferential lending rates.
Mr Nene said the first payment was being made via special appropriation, after which payments would be "done through the normal budget".
He said the reason for this was that the first payment was due before the February budget.
The remaining R23bn was used to recapitalise Eskom.
Mr Nene said the sale of noncore assets to support the budget would not be standard practice. "The sale of noncore assets is always as a result of need. I can’t say we are all out looking for noncore state assets to sell‚" he said.