Key Takeaways
- • Sub-Saharan Africa's sovereign wealth funds (SWFs) hold an estimated $160bn in assets under management, and public pension funds hold $244bn, the smallest totals of any region globally according to Cleary Gottlieb.
- • Fifteen new SWFs were formally established in sub-Saharan Africa between 2010 and 2022, with Mozambique's Fundo Soberano de Moçambique approved as a draft bill in November 2022.
- • Ethiopia Investment Holdings (EIH) has amassed an estimated $150bn in assets under management in under a year and is now described by the IFSWF as the continent's largest SWF, counting 30 state-owned enterprises including Ethiopian Airlines.
- • Gulf sovereign funds are increasingly active in Africa, with Oman's OIA, Qatar Investment Authority and Abu Dhabi entities pursuing ports, renewables and co-investments.
- • African SWFs fall into stabilization, savings and strategic categories, and their governance frameworks are designed to insulate them from political pressure.
Summary
According to a Cleary Gottlieb analysis republished by the South African Government News Agency, state-owned investment institutions in sub-Saharan Africa are deploying capital domestically and abroad, making SWFs and public pension funds increasingly important sources of capital on the continent. The region's SWFs hold an estimated $160bn and its public pension funds $244bn, far below the $4.94tn managed by SWFs in Asia and $4.1tn in the Middle East and North Africa (MENA). The report notes that fund size tracks national GDP, reflecting lower savings and tax rates and more limited access to fossil fuel revenues.
Sub-Saharan African SWFs face more complex mandates than their Gulf counterparts, balancing savings for when commodity extraction declines against urgent development needs such as poverty, unemployment and education. The article groups mandates into stabilization funds, such as Botswana's Pula Fund and Namibia's Welwitschia Fund, which invest in liquid assets; savings funds, such as Mozambique's planned Fundo Soberano and the Lagos State Wealth Fund; and strategic funds, such as Gabon's FGIS, Angola's FSDEA and Ethiopia's Investment Holdings. Citing Global Sovereign Wealth Fund, the report says 33% of sub-Saharan SWFs are strategic, 13% savings and 24% stabilization. Senegal's FONSIS, for example, provided sovereign guarantees and equity for the 30-megawatt Senergy solar plant, and the Nigerian Sovereign Investment Authority seeded two domestic financial market institutions.
Ethiopia Investment Holdings is highlighted as a leading case. According to the IFSWF, EIH has an estimated $150bn in assets under management and counts 30 state-owned enterprises in its portfolio. It agreed in January with the UAE's Masdar to jointly develop two 500-megawatt solar projects and plans to launch the Ethiopian Stock Exchange in 2024-25 with 50 listed companies. Gulf investors are also active: Oman's OIA signed an MoU for a 10% stake in the $1.5bn Suez Wind Energy Project, and the Qatar Investment Authority is reportedly considering a $1bn renewables investment in the Suez Canal Economic Zone. The June 2022 Rabat Declaration led to the creation of the African Sovereign Investors Forum, which brings together the AfDB, several UAE SWFs, Kuwait's Authority and the sovereign funds of ten African countries.
The article notes that globally, state-owned investors deployed an estimated $152.5bn in 2022, up 38% from 2021, even as the sovereign wealth industry's asset value shrank for the first time on record. Developed markets still attract most of this capital, with emerging markets just over 20% of the total. The report also emphasizes that African SWFs established in the past decade were designed with independent decision-making and formal governance structures intended to preserve transparency and accountability through political transitions.
Sub-Saharan African SWFs face more complex mandates than their Gulf counterparts, balancing savings for when commodity extraction declines against urgent development needs such as poverty, unemployment and education. The article groups mandates into stabilization funds, such as Botswana's Pula Fund and Namibia's Welwitschia Fund, which invest in liquid assets; savings funds, such as Mozambique's planned Fundo Soberano and the Lagos State Wealth Fund; and strategic funds, such as Gabon's FGIS, Angola's FSDEA and Ethiopia's Investment Holdings. Citing Global Sovereign Wealth Fund, the report says 33% of sub-Saharan SWFs are strategic, 13% savings and 24% stabilization. Senegal's FONSIS, for example, provided sovereign guarantees and equity for the 30-megawatt Senergy solar plant, and the Nigerian Sovereign Investment Authority seeded two domestic financial market institutions.
Ethiopia Investment Holdings is highlighted as a leading case. According to the IFSWF, EIH has an estimated $150bn in assets under management and counts 30 state-owned enterprises in its portfolio. It agreed in January with the UAE's Masdar to jointly develop two 500-megawatt solar projects and plans to launch the Ethiopian Stock Exchange in 2024-25 with 50 listed companies. Gulf investors are also active: Oman's OIA signed an MoU for a 10% stake in the $1.5bn Suez Wind Energy Project, and the Qatar Investment Authority is reportedly considering a $1bn renewables investment in the Suez Canal Economic Zone. The June 2022 Rabat Declaration led to the creation of the African Sovereign Investors Forum, which brings together the AfDB, several UAE SWFs, Kuwait's Authority and the sovereign funds of ten African countries.
The article notes that globally, state-owned investors deployed an estimated $152.5bn in 2022, up 38% from 2021, even as the sovereign wealth industry's asset value shrank for the first time on record. Developed markets still attract most of this capital, with emerging markets just over 20% of the total. The report also emphasizes that African SWFs established in the past decade were designed with independent decision-making and formal governance structures intended to preserve transparency and accountability through political transitions.
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