There have been a number of studies that have sought to provide an overarching structure for understanding SWFs. The easiest way to to this is to find the largest and most influential funds and then extrapolate universal behaviors or characteristics from them. This is a useful enterprise, it may erase substantial nuance that itself might provide the basis for a deeper understanding of SWFs within globalization and in the context of a state system in which not all states are created equal. In this sense, while the large SWFs are better known, they do not define the entire field of emerging SWF activity. This study provides a brief critical inventory of the emerging communities of sovereign wealth funds. Each post will consider a different and less well known SWF. Taken together, these brief studies might suggest the character and nature of the emerging universe of SWFs, and their possible rationalization.
This post considers the Sovereign Wealth Fund of Gabon (Fonds Souverain de la Republique Gabonaise).
In the past, Gabon has had trouble with insufficient fiscal management, overinflated public sector operating costs, and payment delays on public building projects. In an effort to better utilise income for economic growth, the government remodelled the Fund for Future Generations and launched a new sovereign wealth fund (SWF) in February, which will henceforth be managed exclusively by the newly created Strategic Investment Fund (FGIS). The FGIS will also be responsible for managing all of the government’s stakes. (Gabon: Partnered for growth, Le Gabon.org Aug. 15, 2012).
It is my considered argument that in nations such as Nigeria, Equatorial Guinea, Congo[Kinshasha] Gabon, Angola among others whereby natural resources endowed to those entities are explored and the revenue accruable from the export of those rare resources stolen by successive political administrations and diverted to private pockets, it would be imperative for such countries to consider establishing Sovereign Wealth Funds and for strong institutional and legal frameworks to be enforced for the national assets saved in form of sovereign wealth funds used to build functional infrastructure to promote better life for the greatest number of the citizenry. ( Emmanuel Onwubiko, Is Sovereign Wealth Fund a Right?, The Nigerian Voice, Jan. 14, 2013).
The West African Nation of Gabon has become the latest on the continent to launch a sovereign wealth fund to capitalise on oil sales income, following similar moves by nearby Ghana and Nigeria.
Gabon, which won independence from France in 1960, announced through its Council of Ministers this weekend that it intended to pool money earned from its oil production to fund domestic infrastructure projects. . . .
Gabon’s fund will be called the Fonds Souverain de la Republique and is targeted to raise €760 million. Once 25% of this target is reached, investment returns and surplus oil revenues will be used to hit the target.
The country’s GDP hit $14 billion in 2010, according to the government’s website, with a heavy slant on oil extraction. Oil is the country’s greatest export and a 10% levy on all revenue will be collected and pooled in the fund. (Gabon Creates Latest Oil-Fueled SWF, AI-CIO, Feb. 7, 2012).
Since 1998, Gabon maintained a reserve account at the BEAC to be used as a fund for future generations. In 2010, Gabon converted it to a Sovereign Wealth Fund (SWF) called the Sovereign Fund of the Gabonese Republic. The fund amounts to about $10 million and is managed by a presidential decree. In 2011, Gabon set up a stimulus fund to carry funds for capital projects over into the next budget year to improve the oversight and quality of spending and release resources for growth-enhancing and social projects. The Government reserves these funds for strategic projects in line with the “Emerging Gabon” economic agenda. (U.S. Department of State, Bureau of Economic and Business Affairs, Report--2012 Investment Climate Statement - Gabon (June 2012)).
The FSRG is funded from out of petroleum revenues. "Les ressources sont gérées par le Fonds Gabonais d'Investissements Stratégiques, ayant pour mission de les rentabiliser via des placements stratégiques." (Romuald 'YONGA, Guides de Fonds Souverains Africains, Oct. 2012). It is placed under the direct control of the Presdient of the Republic. (Frédéric Maury, Gabon : le fonds souverain doté de 500 milliards de francs CFA Jeune Afrique, Feb. 6, 2012, "Il est placé sous l'autorité du président de la République Ali Bongo Odimba."). The investment objectives of the FSRG is to diversify economic development in Gabon, rather than to project Gabonese wealth outside the state through investments in foreign state markets. It is managed by the Bank of Central African States (BEAC).
Autrement dit, la mission de Serge Mickoto à la tête du FGIS est de rentabiliser via des placements stratégiques les ressources que l'État gabonais verse annuellement au FSRG et qui proviennent notamment des recettes pétrolières (environ 10 %). Autant dire que cet ancien directeur financier de BGFI Bank, premier groupe bancaire d'Afrique centrale, est l'une des personnes clés de la stratégie de diversification de l'économie gabonaise initiée par le président Ali Bongo Ondimba (ABO). (Stéphane Ballong, Gabon : Serge Mickoto prépare l'après-pétrole, Jeune Afrique, April 23, 2012 ["In other words, the mission of Serge Mickoto the head of FGIS is to return a profit through the strategic investment of resources that the Gabonese government transfers annually to FSRG and which comes mainly from oil revenues (about 10%). Suffice it to say that the former CFO of BGFIBank first banking group in Central Africa, is one of the key people in the strategy of diversification of the Gabonese economy initiated by President Ali Bongo Ondimba (ABO)."]).However, it appears that the Gabonese President has broadened the investment scope of the FSRG to include some strategic investments abroad in clearly identified strategic industries. "To achieve this objective, FSRG has invested both in Gabon and abroad in companies in the infrastructure, mining, port management and other key areas identified by the policies of President Ali Bongo. In this respect, the FGIS was one of the sources used for government involvement in public-private partnership (PPP) with the Singapore Aman Resorts, for an investment of at least $ 70 million over five years." (Biggie Malouana, Le Fonds gabonais d’investissements stratégiques s’adjuge 8% d’Oragroup, Gabon Review, 8 Oct. 2013 (The FSRG also took an 8% interest in Oragroup a pan-African banking group)).
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