Working with Franklin Templeton, a global investment management organisation serving clients in over 165 countries, the International Forum of Sovereign Wealth Funds has released Investing for Growth and Prosperity: In Africa, sovereign wealth funds focus on G, S and E.
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.
Our Director of Strategy and Communications, Victoria Barbary, spoke to CNBC Africa about the main findings of the report.