AIF urges Nigeria, others to tap domestic sovereign wealth funds

The head of the Africa Investment Forum, African Development Bank (AfDB), Senior Director, Chinelo Anohu, has called for stronger strategic partnerships and greater involvement of African sovereign wealth funds to rebuild the continent’s economies following the COVID-19 pandemic.

Anohu made the call while giving a keynote address to Brown Capital Management Forum’s third high-level meeting for Africa sovereign wealth funds recently.

Of the 17 countries with the largest Sovereign Wealth Funds (SWFs), 15 of them are major oil and gas exporters, and unfortunately, Nigeria is the only country with inconsequential savings. Nigeria can only boast of about $3billion in Nigeria Sovereign Investment Authority (NSIA) despite high oil prices.

Norway, which exports 1.2million barrels of oil per day, has over $1.3 trillion in savings in her Government Pension Fund Global also known as the ‘Oil Fund’. Saudi Arabia and UAE can each boast about $1 trillion in savings. According to Global Sovereign Wealth Fund: Kuwait has $738 billion in savings for rainy days, Qatar has $450 billion, Russia has $191 billion, Kazakhstan has $133 billion, Iran: $91 billion, Libya: $66 billion, Brunel: $60 billion, Azerbaijan: $42 billion.

The Africa Investment Forum is Africa’s premier investment marketplace to accelerate transactions that close Africa’s investment gaps.

The Wilson Centre, a Washington, DC think tank, hosted the two-day event, titled Strengthening the Role of African Sovereign Wealth Funds in the International Financial System. Since its 2015 launch, the Brown Capital Management Africa Forum has served as a platform for U.S and African business leaders, policymakers and experts to discuss advancing sustainable development and commercial relations.

Anohu said the Coronavirus crisis had eroded 20 years of development gains in just two years. “Forty million Africans have been pushed into extreme poverty, especially women and youths, as the pandemic exposed systemic vulnerabilities in Africa’s physical and social infrastructure,” she said.

Russia’s war in Ukraine has deepened the effects of the pandemic. The war has caused a spike in food and fuel prices. Anohu stressed that Africa’s recovery will require investments in critical infrastructure of at least $1.2 billion per year. “Africa cannot afford to be caught in the middle between geopolitical competitors, nor left behind,” she said.

Other speakers at the event were Wilson Center President Mark Green and Brown Capital Management Chairman Eddie Brown. The Wilson Center’s Africa Program Director, Dr. Monde Muyangwa, moderated the discussion, which she said, “could not be timelier.”

Muyangwa’s tenure at the Wilson Center has come to an end following her confirmation by the US Senate to be President Biden’s Administrator for Africa at the United States Agency for International Development. She was recognized for her achievements at the Center at the closing ceremony.

“This really is a crucial moment for all of us to think about these challenges, but also how we pursue opportunities that will take us through these challenges,” said Mark Green. “How can sovereign wealth funds also adapt to these changing times, and what role can they play in stabilizing economies and creating that vibrant economic growth that is so key to the continent’s future?”

Eddie Brown said: “The world is changing at a rapid rate, and it is imperative that governments and financial systems adapt to it.” He said sovereign wealth funds should be an integral part of the conversation on navigating these challenges. “Early on its establishment, the Wilson Center African program recognized the critical role of sovereign wealth funds to transform Africa’s economic development, yet these institutions were not widely known.”

In her keynote address, Anohu noted that Africa’s sovereign wealth funds collectively invested about $12.7 billion in 2020—three times as much as in 2019— in response to the pandemic’s impacts. Still, she pointed out, they are seen as lacking the tools needed to identify and evaluate quality projects for investment.

“This is a gap that the Africa Investment Forum stands ready to fill,” Anohu emphasized, inviting meeting participants to attend the Africa Investment Forum’s 2022 Market Days this November. She explained that financing Africa’s ambitious development agenda demanded an enhanced role for African sovereign wealth funds.