Harnessing Africa’s Sovereign Wealth
Although African sovereign wealth funds have already shown their effectiveness, their potential remains largely untapped. By mobilizing and leveraging national savings, these funds not only can increase governments’ capacity to finance public policies, but also can help to attract much-needed foreign capital.
LIBREVILLE/ABUJA/DJIBOUTI – On May 18, African heads of state, European leaders, and representatives of international institutions will gather in Paris for a summit on financing African economies. As heads of African sovereign wealth funds (SWFs), we strongly believe that mobilizing national resources – and using them to attract additional foreign capital – is the only way to ensure our economies’ financial independence.
The COVID-19 pandemic has exposed the lingering vulnerabilities of African economies. They remain too sensitive to exchange-rate risk, unable to finance themselves, and too dependent on donors. In addition, adverse risk perceptions mean that most international investors and asset managers still have only a marginal presence on the continent.
But Africa urgently needs to attract international capital. After the continent’s pandemic-induced recession in 2020, the African Development Bank expects real GDP to grow by only 3.4% this year. This projected recovery will not generate the resources we need to meet our development needs.