Wednesday, September 03, 2014

Chatham House Conference--Africa's Sovereign Wealth Funds: Demand, Development and Delivery

 (Pix (c) Larry Catá Backer 2014 (Ekoi, Nigeria, Animal skin, wood and natural fibers))

Chatham House, the Royal Institute of International Affairs, will be hosting a research event this coming Friday, September 5, 2014: Africa’s Sovereign Wealth Funds: Demand, Development and Delivery.

This from the conference overview:
The number of sovereign wealth funds (SWFs) in Africa has increased in recent years as governments have sought to capitalise on resource revenues, and many other countries are considering setting up such financial vehicles. Currently, African funds account for only about two per cent of total assets under SWF management globally, but this is expected to rapidly expand. Despite growing enthusiasm for these funds little is known about them and critics have raised concerns regarding their accountability, regulation and oversight, as well as their political autonomy, especially in countries with nascent financial systems and institutions. If these funds are to be used not just to offset volatile resource revenues but to finance national development plans, then a greater understanding of their management and potential is required.

This conference will consider how SWFs can develop strategies to ensure their performance as accountable financial tools in service of national economies, rather than becoming grey financial tools or parallel budgets. It will focus on what these funds can deliver for sub-Saharan African states, review their demand, development and delivery on expectations, and discuss their role in the international financial system.

The conference is supported by Quantum Global.

My presentation, International Monitoring and Oversight: Africa’s Increasing Presence, will draw from a recently posted manuscript: "International Financial Institutions (IFIs) and Sovereign Wealth Funds — SWFs as Instruments to Combat Corruption and Enhance Fiscal Discipline in Developing States."

The Conference Programme and the abstract of my presentation follow.

Africa’s Sovereign Wealth Funds: Demand, Development and Delivery
Friday 5th September 2014

Conference Programme

09:00 – 09:30
Welcome and Keynote Address
Welcome: Alex Vines OBE, Director, Area Studies and International Law; and Head, Africa Programme, Chatham House

Keynote Address: What Can Sovereign Wealth Funds deliver for Africa
José Filomeno de Sousa dos Santos, Chairman of the Board of Directors, Fundo Soberano de Angola

09:30 – 11:00
Session 1: Explaining the Emergence of SWFs in Africa
Preserving Export Income for Future Generations in Ghana
Hon. Mona Helen Quartey, Deputy Minister of Finance, Republic of Ghana

Form and function: the search for context-appropriate sovereign wealth funds in Africa
Malan Rietveld, Economics and Politics Researcher, Vale Columbia Centre, Columbia University

Why governments establish SWFs, and how to make them work well
Andrew Bauer, Economic Analyst, Natural Resource Governance Institute

Chair: Alex Vines OBE, Director, Area Studies and International Law; and Head, Africa

Session 2: Best Practices for Investment Management and Governance
Strengthening Governance and Building Investment Management Capacity
Dr Victoria Barbary, Director, Institutional Investor's Sovereign Wealth Centre 

African SWFs and the Santiago Principles
Jennifer Johnson-Calari, Advisor, Sovereign Wealth Governance and Management

Measuring Transparency
Michael Maduell, President, Sovereign Wealth Fund Institute

Developing Best Practice Principles: The case of Norway
*Dr Ashby Monk, Senior Research Associate, University of Oxford Chair: Jonathan Rosenthal, Africa Editor, The Economist

Chair: Alex Vines OBE, Director, Area Studies and International Law; and Head, Africa  Programme, Chatham House

14:00 – 15:30
Session 3: The Social and Political Impacts of SWFs
Stabiliser or Domestic Institutional Investor: What role for SWFs in Africa?
Virgil Mendoza, Head of Central Banks, Standard Bank

Political Accountability of SWFs
Vidar Ovesen, Independent consultant on Oil and Gas Revenue Management; Deputy Minister of Finance, the Government of Norway (2000 – 2001)

Is Domestic Investment for Long Term Gains Achievable?
Dr Håvard Halland, Economist, World Bank

Financing Development: Lessons from the Gulf
Dr Sara Bazoobandi, Lecturer in International Political Economy, Regent's University London

Chair: Alok Sharma MP, Chair, APPG Sovereign Wealth Funds Coffee

Session 4: African SWFs in the International Financial System
International Monitoring and Oversight: Africa’s Increasing Presence
Larry Backer, Professor of Law and International Affairs, Pennsylvania State University
SWFs and International Financial Markets
*Dr Surendranath Jory, Lecturer in Accounting & Finance, University of Sussex Africa’s SWFs and

Regional Financial Stability
Dr Abdullah Al-Hassan, Economist, IMF

Leveraging Influence: The International Political Implications of African SWFs
Dr Adam Dixon, Associate Professor, University of Bristol
Chair: Razia Khan, Managing Director, Head, Africa Macro, Global Research, Standard Chartered Bank


International Financial Institutions (IFIs) and Sovereign Wealth Funds — SWFs as Instruments to Combat Corruption and Enhance Fiscal Discipline in Developing States

Larry Catá Backer
Pennsylvania State University - Faculty of Law and International Affairs
August 9, 2014


Especially since the start of the second decade of the 21st century once more has seen more focused interest in the use of SWFs by home states — less as a means of projecting sovereign financial power outwards and more as a means of internal financial management, and development. What makes this interesting from the perspective of SWF development, is the role of IFIs in SWF development. This essay takes a first look to the way in which IFIs have also begun to use SWFs in their interactions, with a emphasis on developing states. A review of some recent efforts to establish SWFs with a stabilization or development focus suggests the way in which these funds now may better serve the project of fiscal and governance internationalization, and the development of global policy coherence around the fiscal ideologies of IFIs, rather than as an instrument of national policy. Part II briefly sketches the IFI’s interest in and approach to SWFs as a part of their investment, capacity building and rule of law toolkits. Part III then reviews the manifestation of this approach in the development of SWFs in a number of developing states. The essay suggests the ways that stabilization and development SWFs may better serve financial globalization than the particular interest of states establishing them precisely by transposing global standards of fiscal and governance behavior into the internal workings of states. In this sense development and stabilization SWFs serve as an instrument of globalization from the top down (through IFI policy operationalization) perhaps as effectively as SWFs that seek to project national financial power through private market investments abroad. But it also creates the possibility of divergence in SWF character as the consequences of the use of SWFs as governance devices may produce substantial deviation from the traditional organizational parameters of SWFs as instruments of macroeconomic policy.

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