Libya future | Briefly about money and investments (4)

Political economy and state funds in the Middle East and Africa

The steady rise in oil prices has provided opportunities for sovereign wealth funds to make larger investments. For Middle Eastern funds and some African funds, the past 60 days have been busy with investment and capital allocation activities across many different sectors. Globally, funds in the Arabian Gulf region have been pioneers in acquisitions and asset allocations in environmentally focused projects. These funds have demonstrated strong investment leadership internationally and locally.

Ethiopia – Ethiopia Investment Holding Company (EIH):

This newly established fund is making its first foreign investment move by buying a 30% stake in a new oil terminal project at the port of Damirjog in Djibouti. The new project will cost 4 billion dollars, and it will be built by the Moroccan company SOMAGEC, which specializes in port infrastructure. The project will have strategic benefits for both Djibouti and Ethiopia.

Libya – Libyan Investment Authority (LIA):

At a meeting of fund managers and subsidiaries last November, the chairman of the Libyan Investment Authority and the CEOs of the Foreign Investment Company announced the completion of their joint annual financial statements, but neither was released for public review. LIA has not announced any new investments or asset sales in 2022.

Gabon – Gabon Strategic Investment Fund (FGIS):

This $2 billion fund is pioneering green and renewable energy in Africa. The fund recently announced the issuance of a $200 million bond, the most important green bond in Africa, to finance and build hydropower plants in the country.

Nigeria – Lagos State Property Fund:

Nigeria has established the first sub-fund of the Nigerian Sovereign Wealth Fund to focus on the development of Lagos in a 30-year plan to make the country an investment and technology hub in Africa. The focus will be on local infrastructure. For now, it is not clear how much initial funds the fund will receive.

Nigerian National Wealth Authority (NSIA):

Nigeria’s Minister of Finance, Budget and Planning has called for an increased injection of capital into the US$4 billion sovereign wealth fund for the benefit of future generations, without ignoring current development needs. The minister also calls for greater capital support for local infrastructure projects.

Mozambique:

Mozambique’s finance minister, Max Tunilla, has announced plans to launch the country’s first sovereign wealth fund, which will invest $95 billion in new revenues from LNG sales over the next 25 years. It is expected that the fund will receive half of the state revenues from the sale of gas for local investments, and the rest of the money will be intended to support the state budget during the first two decades of the sale of liquefied natural gas.

USA – Africa:

Recently, at the Woodrow Wilson International Center for Scholars in Washington, DC, more than 60 delegates from 18 countries and many distinguished guests from Africa, the United States, and international organizations gathered to discuss the role that sovereign wealth funds in Africa can play in domestic and regional economic growth. Participants focused on future opportunities, better policies and how to work together to advance sovereign wealth fund plans and build a better African economy.

Africa – African Investment Forum:

An exceptional year for this Africa-focused investment organization. The theme of this year’s meeting was Building economic resilience through sustainable investments. With this in mind, more than $63.8 billion has been completed in which institutional investors around the world have committed to underwriting. The gathering attracted many heads of state and CEOs of investment and international financial organizations from around the world. The sectors targeted were infrastructure, agriculture, energy, education and projects promoting women-owned businesses. The President of the African Development Bank, Mr. Adesina, said the forum aims to attract foreign direct investment (FDI) and increase private sector participation. As of 2018, the forum has attracted more than US$100 billion in investment.

Sultanate of Oman – Oman Investment Authority (OIA):

According to Bloomberg, this fund now has $41.5 billion in assets under management spread across 40 countries, with a focus on real estate, logistics, mining and industrial projects. The fund posted an average annual return of 10.3% in its 2021 annual review, with most of its investments reaching 61% in Oman, 17% in North America, 9.3% in Western Europe and 4.7% in the Asia-Pacific region. Over ten years, and especially the last two years, I have watched this fund make small steps with big impact at the strategic level and at the level of its executive team. With the political leadership and economic vision of the Sultanate, I expect great achievements in the future of this fund.

United States of America – United Arab Emirates:

To achieve zero emissions goals by 2050, the United States and the UAE signed a strategic partnership to invest $100 billion to generate 100 gigawatts of clean energy globally by 2035. The agreement also calls for support for green-focused projects in developing countries and developing countries through technical and financial assistance. Under the same agreement, the United States and the United Arab Emirates agreed to produce clean fuels for use in long-distance transportation such as freight and aviation.

United Arab Emirates:

In order to meet its commitment to zero emissions by 2050, the UAE has announced a series of investments over the next decade that will have a positive impact on the environment. Over the next three decades, $163.5 billion worth of clean and renewable energy projects will be commissioned. In 2030, the world’s largest solar power plant with a capacity of 2 GW will be completed in Abu Dhabi, as well as the development of the Mohammed bin Rashid solar power plant with a capacity of 5 GW.

Amr Al-Khattali

Researcher in sovereign wealth funds and political economy in the Middle East and Africa.

See:

Briefly about investments and money (1)

Briefly about investments and money (2)

Briefly about investments and money (3)