The COVID-19 pandemic presented Africa's sovereign wealth funds with the opportunity to accelerate investment themes they had already identified, such as health care, agribusiness and digital technology.
A report by the International Forum of Sovereign Wealth Funds, in partnership with Franklin Templeton, found that of those funds that invest domestically, "the pandemic has been a boon." Demands as a result of the crisis stimulated domestic industries in which these funds already invested since their products and services were in high demand.
Two of the funds surveyed for the report said their existing investments in medical facilities, supplies and pharmaceuticals paid off as demand increased, with plans to invest further in the sector and improve their countries' health-care services overall. "Such investments will make these countries more resilient to economic and health shocks in the future," the report said.
Sovereign wealth funds based in Angola, Botswana, Ghana and Nigeria, which largely have stabilization and savings mandates, were used by their governments to finance public spending. One fund was forced to rebalance its portfolio and "cash in on some of the gains" from equity holdings in the second quarter. That fund — which was unnamed — is also looking at its governance structure and whether the withdrawal rules need strengthening to protect the fund's value.