Research reveals the challenges and opportunities for a new generation of sovereign wealth funds
London and Cape Town, April 28 2021 – Today, the International Forum of Sovereign Wealth Funds (IFSWF), a global network of sovereign wealth funds from nearly 40 countries, and Franklin Templeton, a global investment management organisation serving clients in over 165 countries, has released new research, titled Investing for Growth and Prosperity: In Africa, sovereign wealth funds focus on G, S and E about the challenges and opportunities faced by sovereign wealth funds on the continent of Africa.
The research draws on a wide-ranging survey and interviews with officials from 11 African countries that have a sovereign wealth fund or are in the process of establishing one. The report reveals how the continent’s sovereign wealth funds are seeking to attract private capital from international investors to meet the continent’s unique set of challenges: a shortage of domestic and international investment, a widespread lack of trust in institutions, and huge economic development needs.
The report identifies three key challenges to which Africa’s sovereign wealth funds are taking a similar approach:
- Governance. For Africa’s sovereign wealth funds, robust, independent governance is key to attracting private capital. If they are going to attract co-investors, it is essential that international private investors see these funds as peers with aligned interests. Similarly, independence and transparency are essential to building public trust, particularly where the perception of government institutions is largely unfavourable.
- Social Impact. For African sovereign wealth funds ensuring that they have a material, and measurable, impact on the lives of their people builds legitimacy at home, an imperative made more important by the COVID-19 pandemic. To attract large international investors, Africa’s sovereign wealth funds are seeking to collaborate to create projects at a financial and social scale that will have a significant impact on the lives of their citizens.
- Environment. Rather than adopting the widely accepted approach to implementing environmental, social and governance frameworks, many African sovereign wealth funds are focusing on solving the problems caused by climate change, such as food and energy security, which can drive conflict and ill-health. This approach enables them to have a direct bearing on the everyday lives of their people.
Duncan Bonfield, IFSWF Chief Executive, said, “Africa has become a focus for the planning and creation of new state-owned investors. But these funds are distinct from the resource-rich funds that made up the early wave of their peers. This research shines a much-needed light on a new and innovative sovereign wealth fund model in Africa, which we hope will assist the funds’ collaboration and help their potential co-investors understand them better.”
Sandeep Singh, Regional Head of Central & Eastern Europe, Middle East and Africa and Head – Islamic Business at Franklin Templeton, said, “The current global macro environment poses challenges for global asset owners, especially Africa’s sovereign wealth funds, which are a distinctive group of state-owned investors. They continue to evolve to address the continent’s unique set of challenges and remain focused on attracting capital into their respective domestic economies. At Franklin Templeton, we are excited to leverage our extensive capabilities to help African sovereign wealth funds navigate the challenging global environment and jointly develop customized solutions to meet their objectives.”
The full research report, Investing for Growth and Prosperity: In Africa, sovereign wealth funds focus on G, S and E is available here
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About the International Forum of Sovereign Wealth Funds
The International Forum of Sovereign Wealth Funds (IFSWF) is a voluntary organisation of global sovereign wealth funds committed to promoting good governance and investment management practices through dialogue, research and self-assessment. The IFSWF also seeks to promote a deeper understanding of sovereign wealth fund activity amongst government and financial services institutions.
Find out more at www.ifswf.org
Contact: Victoria Barbary, Director of Strategy & Communications, IFSWF
About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience and approximately $1.5 trillion in assets under management as of March 31, 2021. For more information, please visit franklinresources.com, and follow us on LinkedIn, Twitter and Facebook.
This press release is intended to be of general interest only and does not constitute professional advice. Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission.
Contact: Grace Wittenberg, Senior Corporate Communications Consultant, Franklin Templeton
Tel: +971 4 428 4172