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Africa's Quest for Development: Can Sovereign Wealth Funds Help?

Institutional Investors in Global Capital Markets

ISBN: 978-1-78052-242-5, eISBN: 978-1-78052-243-2

ISSN: 1569-3767

Publication date: 27 September 2011

Abstract

Purpose – This chapter discusses the potential role that Sovereign Wealth Funds (SWFs) could play to enhance development in African economies, both as recipient and home countries.

Methodology – We use hand collected data on the universe of Africa's SWFs, their sizes and transparency, and reporting scores to provide a landscape of these funds. We also focus on a sample of investments in Africa made both by African and foreign SWFs to describe the type of interventions these vehicles have been making on the continent.

Findings – Our analysis shows that African SWFs are small, suffer from poor governance, and are mainly focused on stabilizing local economies. This suggests that their potential role as long-term institutional investors to foster economic growth is likely to be limited if current practices are maintained. On the other hand, foreign SWFs are increasingly interested in Africa and are poised to play a bigger role in supporting the continent's growth if the right strategies are implemented.

Social implications – The chapter identifies opportunities that Africa offers to SWFs as well as the challenges that need to be addressed in order to enhance SWFs' role in supporting the continent's development.

Originality/value of paper – This chapter provides the first comprehensive landscape of African SWFs while also describing their interventions. It also uses an original data set to describe the geographic and sector distributions of foreign SWFs investments in Africa.

Keywords

Citation

Triki, T. and Faye, I. (2011), "Africa's Quest for Development: Can Sovereign Wealth Funds Help?", Boubakri, N. and Cosset, J.-C. (Ed.) Institutional Investors in Global Capital Markets (International Finance Review, Vol. 12), Emerald Group Publishing Limited, Bingley, pp. 263-290. https://doi.org/10.1108/S1569-3767(2011)0000012013

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited