On Thursday and Friday this week, Agaciro Development Fund hosted the second annual meeting of the African Sovereign Investors Forum (ASIF) in Kigali, Rwanda. The Forum was started by Morocco’s Ithmar Capital last year in Rabat in an attempt to increase collaboration among African SWFs, to compare notes of common challenges, and to create appealing, sizeable, Pan-African investment opportunities for foreign (e.g., Middle Eastern) SWFs.
The nine inaugural members, which together manage US$ 12.3 billion, were in attendance (except for Senegal’s FONSIS, which had a recent change in CEO), and welcomed two new funds to the club: Ethiopian Investment Holding (EIH), which manages almost four times the aggregated capital of the rest of the members thanks to a significant portfolio of stakes in national champions, as well as Mauritius Investment Corporation (MIC), which was born out of Covid-19.
Obaid Amrane, CEO of Ithmar Capital and Chair of the IFSWF and ASIF, witnessed the signing of the two new members and announced conversations with other African funds including Botswana’s Pula Fund and Namibia’s Welwitschia Fund. The most noticeable absence of the forum continues to be the Libyan Investment Authority (LIA), which is by far the continent’s largest SWF. However, Mr. Amrane showed confidence in reaching a mobilization of US$ 1 billion within ASIF members within the next 12 months.
In 2022, three Gulf SWFs endorsed the establishment of the forum, ADIA – represented by the ED of Infrastructure; ADQ – represented by the CEO and recently named UAE Minister of Investment; and KIA, represented by its Managing Director. However, no senior delegate of a SWF from outside of Africa attended the 2023 edition.
The two-day conference revolved around key issues such as the support of key stakeholders such as the African Union and the African Development Bank; the promotion of cheaper renewable energy globally; the opportunity coming from demographics (presented by McKinsey); and the possibility of transferring nature-based assets to SWFs to make them more “transactable” (presented by Konfidants).
In addition, NSIA – a leader in the 2023 GSR scoreboard – introduced a new Climate Financing and Energy Transition (CFET) sub-group that is comprised by seven of the ASIF members plus Ghana’s GPF and South Africa’s pension manager PIC, to discuss best practices and investment opportunities around five key topics: green project development, carbon markets, climate finance, energy transition and policy framing. The group aims to meet once a month and to publish a thought leadership report by year-end.
Foreign direct investment in Africa continues to disappoint - according to UNCTAD's World Investment Report 2023, international project finance deals targeting Africa showed a decline of 47% in value in 2022. We observe different patterns when it comes to Northern vs Sub-Saharan Africa: in Northern Africa, a lot of the inbound capital comes from Gulf investors pursuing “discreet power”, while in Sub-Saharan Africa, several deals come from within African funds investing in their own economies. Strategic funds in other regions (Europe, Asia) have proven to be an effective way of promoting FDI - African funds must follow suit.
Photo credit: @AgaciroFund
