Fascinating Roundtable in Morocco

Ashby Monk

The Africa Sovereign Funds Roundtable in Morocco, organized by Institutional Investor’s Sovereign Investor Institute, is now over, and I’m pleased to report that it was fascinating. Topics ranged from the practicalities of investing in Africa to the design and governance principles that African countries should think about when setting up their own funds. Once again, all credit to the organizers for putting on an enjoyable event. It’s not every day I get to chat with Tony Blair about SWFs.

Now, the actual Roundtable proceedings are totally off the record. As opposed to the Chatham House Rule, these events appear to be run under the ‘Las Vegas Rule’ (i.e. ‘what happens in the meetings…stays in the meetings’). And, perhaps to your chagrin, I plan to hold up my end of the bargain and withhold all specifics about the event. However, I will offer you some interesting predictions about the future that I’ve derived from conversations and discussions at this event. These points represent my views and interpretations alone.

1) In five years’ time, there will be more SWFs on the African continent than on any other continent in the world. Africa will even have more SWFs than the Middle East and Asia (probably combined). Come again? Yep. Remember it. Write it down. Take a picture. In 2016, Africa will boast 20+ sovereign funds.

2) What Asia was 10 years ago to emerging market investors, Africa will be less than 10 years from today. Why do I say that? Because the investment trailblazers who opened up Asia 20 years ago are doing the same for Africa today. Seriously. They are on the ground doing PE deals all over Africa. And you know what? Their investment rationales sound legitimate.

3) Over the next five years, you’ll stop hearing as much about African commodities, and you’ll start hearing a lot about African infrastructure. And I’m not talking about development projects; I’m talking about return-driven investments. As one investor eloquently put it, “We’re not investing in the region to be ‘nice guys’, we’re here to find good investments.”

4) Foreign SWFs (i.e., non-African SWFs) will finally get off the fence and start allocating non-negligeable amounts of their portfolios to Africa. To date, most SWFs view Africa as a bit of an investment curiosity (at best). But things will get very serious for these funds in the near future. They’re starting to get the picture.

I don’t want to give you the impression that we had nothing but good things to say about investing in Africa. Obviously, we talked a lot about the political turmoil, the lack of credible knowledge at the local level, the unquantifiable risks and so on. However, even with all the negatives, the investment proposition still came across as credible.

Anyway, thanks again to the folks at Institutional Investor for inviting me along. I look forward to the global event in London this May.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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