Proceedings of the 6th Economic & Finance Conference, OECD Headquarters, Paris

SOVEREIGN WEALTH FUNDS AND INFRASTRUCTURE DEVELOPMENT IN AFRICA

SEEDWELL HOVE

Abstract:

Sovereign wealth funds (SWFs) are increasingly becoming major sources of finance in many African countries. This paper analyses the potential role that SWFs could play in financing infrastructure development in Africa. The paper documents the state of infrastructure and its financing needs in Africa, dissects the anatomy of sovereign wealth funds on the continent, and assesses the extent to which sovereign wealth funds can bridge the infrastructure financing gap. The analysis shows that Africa’s infrastructure needs new sources of finance to cover the existing financing requirements. Although African SWFs are still small compared to those in other countries of the world, they have the potential to contribute meaningfully towards financing infrastructure development and fostering economic development in Africa. Putting in place favorable conditions for business and ensuring stable political and governance conditions can also attract global sovereign wealth funds to invest their massive resources in Africa. The paper also highlights some risks and opportunities for infrastructure investments on the continent.

Keywords: Sovereign wealth funds, Infrastructure development, asset allocation

DOI: 10.20472/EFC.2016.006.008

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