African SWFs look to ESG for capital growth

Africa mapA greater focus on governance is key for African sovereign wealth funds looking to attract private capital, according to a recently released report. The study, ‘Investing for Growth and Prosperity: In Africa sovereign wealth funds (SWFs) focus on G, S and E’, was produced by the International Forum of Sovereign Wealth Funds (IFSWF) and fund manager, Franklin Templeton. It surveyed officials from 11 African states with SWFs or in the process of establishing one on their approach to three common challenges – a shortage of domestic and international investment, a lack of trust in institutions and sizeable economic development needs. The report found that independent governance, social impact and environmental concerns will be key to solving these issues. “For Africa’s sovereign wealth funds, robust, independent governance is key to attracting private capital,” states the report. “If they are going to attract co-investors, it is essential that international private investors see these funds as peers with aligned interests.” There is also a greater focus on climate change issues, such as food and energy security, as opposed to sovereign funds in other regions, according to the report. “Africa has become a focus for the planning and creation of new state-owned investors. But these funds are distinct from the resource-rich funds that made up the early wave of their peers,” said Duncan Bonfield, IFSWF Chief Executive.
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