Frontier sovereign wealth funds

September 14, 2009

Macroscope has discussed the growth of sovereign wealth funds many times (see here or here). Just to recap, the global state-owned SWF industry is set to more than double in the next 10 years from the current $3 trillion, according to estimates from Deutsche Bank.

John Green, global head of business development at Anglo-African bank Investec, argues that Africa will play a key role in the expansion of SWFs in years to come.

“Africa is very rich in commodities. Africa in aggregate has gone from a significant fiscal deficit, largely funded by aid, to a continent that has a fiscal surplus. That’s what has precipitated a lot of thinking around this issue,” he says.

Green says he agrees with the view that in the next 5 years there will be enough surplus around in many African countries to begin to build future generation funds properly.

Libya is a leader here with the continent’s biggest sovereign wealth fund, which manages $65 billion in assets. Nigeria is working on legislation to create a SWF aimed at softening any impact from falling oil prices.

Read the full Reuters interview here.

3 comments

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I think the point about Africa is well made. The Demand side of the Equation is no longer egregious and inflected with the surge in China [and India] trade with Africa. From a standing start we have crossed $100b. This means a degree of competition for our Resources and Investors might care to extrapolate how deep the V would have been without Chindia.

Aly-Khan Satchu
http://www.rich.co.ke
Twitter alykhansatchu

The point is, till all international trade is dollar denominated, all countries will bear the vissicitudes of currencly fluctuations. At one time it was the British Pound, then the US $, and now the time has come for the world to mve away from the US $ into a more representative basket of currencies, which will include some from Asia as well. This way all Asian and African countries can be truly economically independent. Msg from India.

Posted by eternal | Report as abusive

Given the skewed presence of natural resources in Africa, the build up of SWF will largely be seen in countries endowed with natural resources such as oil, diamond, copper and gold. Given the political fluidity of Afrian states I’m not sure how the SWF will be ringfenced from the itchy fingers of these leaders.What will stop them fro dipping thier hands in the till, just like they do on central government coffers?

Posted by ole turana | Report as abusive