Public savings in Africa: Do sovereign wealth funds serve development?

Arbeitspapier

Do sovereign wealth funds (SWFs) contribute to Africa's development? This paper assesses the objectives of SWFs (fiscal stabilization, productive investment, intergenerational saving) and discusses alternatives. We argue that fiscal stabilization funds are often necessary, but entail considerable opportunity costs. In the absence of a strong framework of multilateral financial assistance that would reduce 'self-insurance' needs, paying down sovereign debt during times of revenue windfalls may constitute a better option as the cost of debt servicing usually exceeds the rate of return on financial investments. Investing in human capital and infrastructure has higher developmental returns than the returns on financial assets in intergenerational SWFs. Capitalizing development funds or national development banks to fund productive investments for long term structural transformation, provided they have clear mandates and strong governance, may also be preferable to intergenerational SWFs.

Object Details

• ISBN: 978-92-9267-292-8
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2022/159

Classification and Topics

• Classification: Wirtschaft ; Economic Development: General ; Development Planning and Policy: General ; Economywide Country Studies: Africa ; Exhaustible Resources and Economic Development
• Subject: public savings ; sovereign wealth funds ; national development banks ; fiscal stabilization ; Africa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Addison, Tony ; Lebdioui, Amir
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2022

Further information

• DOI: doi:10.35188/UNU-WIDER/2022/292-8
• Handle: http://hdl.handle.net/10419/273948
• Last update: 10.03.2025, 11:43 AM CET