Gauteng’s finance minister Mandla Nkomfe has allocated R243-million of the province’s budget to an unauthorised private equity fund that has been unable to raise one cent of private investment in more than two years.
The Mail & Guardian previously reported on the existence of the Gauteng Fund — a controversial entity established by provincial premier Paul Mashatile to raise private sector capital for government projects.
Gauteng has already spent R40-million on the fund to establish a project office and on travel and salaries. Mashatile pledged a further R500-million as ”seed capital” during his budget speech last year. Now Nkomfe has announced that Gauteng would give the fund a further R243-million in order to ”build capacity in the project office in order to discharge on its mandate”.
During his budget speech, delivered on February 24, Nkomfe said 37% of the provincial fiscus’ budget would go to the fund’s project office ”that explores alternative ways of financing strategic infrastructure projects in the province”.
Questioned about the fact that the fund has not yet been approved by national treasury, Nkomfe’s spokesperson Lebogang Seabelo told the M&G the provincial government is working ”towards the fulfillment of all legal and regulatory requirements for the listing of the [fund] as a public entity”.
According to Seabelo the fund is a trading entity in the provincial fiscus. Asked about the lack of external investment, he said: ”It is in the nature of government to meet with potential investors, both local and international, who are interested in investing in the province — it should be noted that capital raising is not an event but a process, therefore discussions around capital raising are on-going.”
The M&G reported in December that Mashatile, Nkomfe and staff of the private equity firm Freetel Capital visited the United Arab Emirates in an attempt to raise capital for the fund.