Sovereign wealth funds 'will drive Africa’s economic self-reliance'

In pursuit of Africa's economic self-sufficiency, the establishment of strategic partnerships among the continent's sovereign wealth funds has emerged as a crucial driving force. ALSO READ: Boosting development through sovereign wealth funds This critical aspect was underscored at the second annual meeting of the African Sovereign Investors Forum (ASIF), currently taking place from July 6 to 7. The event revolves around the theme of Strategic partnerships: driving Africa's resilience and sustainable development. The ASIF gathering convenes various authorities in the sovereign wealth funds ecosystem, alongside government officials and other stakeholders. The primary focus is to evaluate challenges and explore development opportunities across all sectors of the African economy. Presently, Africa boasts at least 30 sovereign wealth funds, with a collective value of $100 billion. Eric Rwigamba, Minister of Public Investments and Privatization, urged participants to deliberate on Africa's investment potential and challenges while emphasizing the vital role of collaboration among diverse stakeholders. We aim to discuss strategies for enhancing private and institutional mobilization to contribute to Africa's sustainable and inclusive development, Rwigamba said. Despite Africa's impressive growth in trade over the past two decades, its share of global trade has remained relatively unchanged. While Foreign Direct Investments into Africa have surged from $39 billion in 2020 to $83 billion in 2021, intra-Africa trade accounts for only 16 percent of global trade. In contrast, the continent's trade with Europe stands at 67 percent, 53 percent with Asian countries, and 30 percent with America. While we celebrate these modest achievements, it is crucial to recognize that our performance still lags due to several structural changes on the continent that impede desired economic development, he remarked. Rwigamba highlighted issues such as infrastructure deficit, insufficient export diversification, market fragmentation, low integration levels, and excessive reliance on natural resource exports as internal challenges. Furthermore, Africa has faced the repercussions of recent global shocks, including volatile commodity prices and a contraction in global demand amidst growing protectionism. This has resulted in substantial capital outflows from developing to advanced economies. The importance of strategic partnerships, particularly within the context of our continent, is beyond question. We need to discuss strategies to enhance the competitiveness of Africa's investment landscape and strengthen our economies' capacity to effectively address the current challenges we face, Rwigamba said. The meeting takes place as Rwanda's sovereign wealth fund, Agaciro Development Fund, celebrates a decade of effectively utilizing voluntary public contributions to contribute to the country's socioeconomic development. ALSO READ: Agaciro Fund celebrates 10 years, aspires to greater socio-economic impact Since transitioning from contributions, the fund has successfully amassed a portfolio valued at $284 million through various investments in 29 local and international companies, serving as an alternative revenue source. Through this fund, Rwanda became a co-founder of the ASIF in 2020, alongside ten African sovereign wealth funds. Today, two new members, Ethiopian Investment Holdings and Mauritius Investment Corporation, have joined the organization. Obaïd Amrane, Chairman of ASIF, emphasized that in Africa, the focus should not solely be on investor interests or capital availability. Instead, it should revolve around creating favorable conditions and projects that encourage investors to commit capital. He noted that ASIF aims to mobilize approximately $500 million by COP28 and $1 billion within the next 12 months. Our objective is to direct investments toward the continent's priorities and generate intergenerational wealth. The ongoing working group of ASIF has prioritized the impact of climate change, food security, and the digital divide, he explained. During the meeting, stakeholders will also discuss strategies for mobilizing private capital to bridge the investment gap in achieving the Sustainable Development Goals (SDGs).

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Sovereign wealth funds 'will drive Africa’s economic self-reliance'