The Coronavirus pandemic has huge downside effects on economies across the world and South Africa’s is of no exception. South Africa’s Gov has gone ahead into considerations of proposals from different sectors including the sale of a R100-Billion social impact bond.
The proposal for the bond was submitted by Intellidex, a South African capital markets and financial services consultancy, according to Stuart Theobald, its chairman. While it wasn’t solicited by the government, it is being considered, he said.
President Cyril Ramaphosa’s administration is under pressure to come up with a response to the economic fallout of the coronavirus outbreak.
The cabinet meeting to discuss economic measures is expected to happen this Monday.
South Africa’s budget could reach up to 10% of the total Gross Domestic Product according to IMF projections which ultimately mean that South Africa has few funds to boost the economy that is expected to contract by great margins this year due to Covid-19 pandemic.
A social-impact bond would tap the growing trend for investments that meet the requirements of the environment, social and governance strategies.
If the bond sale proposal is given the green light, the returns would be used to fund unforeseen health expenditure and could be used to mitigate the economic impact of the crisis