13 May 2019

Sovereign wealth funds have the potential to unlock Africa’s economic potential through participation in infrastructure projects, World Bank vice president and treasurer, Mr Jingdong Hua has said.

Speaking at the end of a two-day conference hosted by Brown Capital Management and Wilson Centre Africa Programme in Gaborone recently, he said apart from providing liquidity support and macroeconomic stability of countries, the funds could enable private enterprises to drive job creation.

He advised countries with such funds to work with the World Bank in unlocking investment opportunities which he said was best placed to assist governments with expertise on their strategic use in private sector investment opportunities.

Bank of Botswana governor, Mr Moses Pelaelo said the funds could play a more active role in Africa’s development by bridging the infrastructure funding gap, supporting industrial development and economic diversification as well as reducing macroeconomic volatility.

He however said governments with such funds should have clearly defined policy objectives to guide the institutional architecture including the locus on whether it was outside the central bank, a standalone entity or in the finance ministry.

“It is also important to emphasise the issue of governance and technology and architecture that should underpin the purpose of SWFs,” he said.

The conference recognised that in Africa the funds differed in mandate and that there was diversity in terms of their mandate and organisational designs.

It also highlighted that fund objectives should be aligned with current and future national priorities such that their savings dimension were balanced and complemented the immediate development needs of the states.

The meeting looked at socio economic returns over and above commercial ones, fund  management in Africa and the fact that they should not be guided by short term objectives.

Further, it was agreed that emerging funds should adopt the Santiago Principles that encourage them to be accountable, independent and transparent as well as develop necessary skills set or capacity to manage their funds and collaborate with credit worthy institutions such as the World Bank, International Finance Corporation and the African Development Bank.

For his part, Wilson Centre member who is also Brown Capital Management founder chairperson and CEO, Mr Eddie Brown said the US government was committed to contribute to Africa’s development through sovereign funds.

“We at Brown Capital thought that Africa was not getting attention and the board of trustees at Wilson Centre appointed by US government appointed cabinet members to basically dialogue on Africa and we at Brown Capital stepped up to be a sponsor of the Africa Forum,” he said.

The two-day conference brought together eleven African countries to share notes on best practices and the role of the in Africa’s development.ENDS