Sovereign Wealth Funds and Long-Term Investments in Sub-Saharan Africa
This paper explores the landscape, contributions, and determinants of sovereign wealth funds' long-term investments in Sub-Saharan Africa. The study finds that of all regions, Africa receives the lowest share of investment from sovereign wealt...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/736301480964634718/Sovereign-wealth-funds-and-long-term-investments-in-Sub-Saharan-Africa http://hdl.handle.net/10986/25802 |
| Summary: | This paper explores the landscape,
contributions, and determinants of sovereign wealth
funds' long-term investments in Sub-Saharan Africa. The
study finds that of all regions, Africa receives the lowest
share of investment from sovereign wealth funds, and the
landscape is dominated by Asian funds. The investment
strategies of sovereign wealth funds established by African
countries tend to be to invest less domestically and more
abroad, contrary to Asian funds. In addition, using an
enriched simple mean-variance portfolio model with an
exponential utility function, the analysis shows that the
investment rate of return and political connections have a
positive and significant effect on sovereign wealth fund
investments, and risk exerts a negative but not significant
effect. The paper confirms these results empirically, using
a database that includes 26 sovereign wealth fund
investments over 1985-2013. Hence, sovereign wealth funds
investing in Africa care more about high returns and the
political interests of their country of origin than the risk
of their investment. |
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