Sovereign Funds: a Strategic Redefinition for the Development of the African Continent

Since 2016, African sovereign funds have experienced unprecedented creation dynamics, according to an analysis by the Policy Center. The document, entitled “African sovereign funds: a second wave (2016-2023) under the sign of strategic redefinition”, highlights the emergence of 24 sovereign funds in 21 African countries during this period.

The study highlights that eight countries have created their first sovereign fund, and in the case of Morocco, a second fund saw the light of day in 2022. This second wave of creation of sovereign funds is distinguished from the first by its source of financing, primarily based on transfers of public assets rather than natural resources such as oil and gas. The African sovereign funds of this new wave are more oriented towards strategic investment platforms rather than intergenerational funds.

Their main objective is to mobilize international capital using public money as leverage to finance strategic projects in their respective countries. Thus, these sovereign funds become key players in the economic development of the continent.

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Morocco at the helm of the IFSWF

The study also highlights the crucial role played by Morocco in this second wave. In November 2021, the Moroccan sovereign wealth fund, Ithmar capital, was elected to chair the board of directors of the International Forum of sovereign wealth funds (IFSWF), thus becoming the first African country to access this position.

The Moroccan presidency of the IFSWF has enabled the acceleration of a dynamic of creation of new African sovereign funds. By being the first African sovereign fund to chair the IFSWF, only six years after its creation, Ithmar capital allows the Kingdom to now be a visible player in the landscape of strategic sovereign funds on the continent.

In addition, Morocco initiated the creation of the African Sovereign Investors Forum (ASIF), which organized its first forum in June 2022. The purpose of the ASIF is to promote a collective and concerted action by African sovereign and strategic funds for the benefit of development and growth, not only of their countries, but also of the continent; for a more resilient, inclusive, sustainable and autonomous Africa.

The investments targeted by the platform range from infrastructure to food security, including industrialization, urbanization and climate change.

The growing attractiveness of Africa and the importance of sovereign funds

The Policy Center’s analysis highlights the growing importance of African sovereign funds in attracting foreign investments to the continent. These funds have already demonstrated their effectiveness on the international scene and are helping to correct the negative image of the continent among potential investors.

The study also takes stock of African sovereign funds in 2023, providing information on their number, their history, their financing and their objectives. It highlights the diversity of countries holding these funds, which are characterized by different needs, levels of development, demographics and horizons.

The analysis proposed by Policy Center showed that African sovereign funds are experiencing a strategic redefinition of their role in the economic development of the continent.

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First published in LES ECO.ma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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