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Book part
Publication date: 27 September 2011

Thouraya Triki and Issa Faye

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…

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.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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Book part
Publication date: 27 September 2011

Narjess Boubakri, Jean-Claude Cosset and Hyacinthe Y. Somé

Institutional investors have increasingly gained importance since the early 1990s. The assets under management in these funds have increased threefold since 1990 to reach…

Abstract

Institutional investors have increasingly gained importance since the early 1990s. The assets under management in these funds have increased threefold since 1990 to reach more than US$45 trillion in 2005, including over US$20 trillion in equity (Ferreira & Matos, 2008). Further, the value of institutional investors' assets represents roughly 162.6% of the OECD gross domestic product in 2005 (Gonnard, Kim, & Ynesta, 2008). Given the magnitude of institutional investors' holdings relative to the world market capitalization, challenging questions on the economic role of these investors have been raised. One such question concerns their impact on the stability of stock markets. On the one hand, active strategies of buying and selling shares by these investors may contribute to moving stock prices away from their fundamental values. On the other hand, if all institutional investors react to the same information in a timely manner, they are in fact helping to increase market efficiency by speeding up the adjustment of prices to new fundamentals (for competing theories on the role of institutional investors, see, e.g., Lakonishok, Shleifer, & Vishny, 1992). This view of institutional investors as “efficiency drivers” generated considerable debate for many years (see, e.g., Ferreira & Laux, 2007; French & Roll, 1986).

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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Book part
Publication date: 27 September 2011

Abstract

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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