Statistical data compiled and presented by the Global Sovereign Wealth Funds (SWF) platform states that when it comes to Sovereign Wealth Funds, the global leader by assets is Norway’s Government Pension Fund Global (GPFG), with 1.4 trillion dollars invested, followed by two Chinese funds, in a list where Middle Eastern countries such as the United Arab Emirates, Saudi Arabia and Kuwait stand out. In Africa, Libya is the most valuable, followed by Ethiopia and Botswana. If the gas exploration forecasts are confirmed, Mozambique’s new Sovereign Wealth Fund has the potential to enter this ranking.
Sovereign wealth funds, unlike traditional investment funds, are not listed on the market and cannot be bought by private or institutional investors. They are funds created and managed by governments, with long-term profitability objectives aimed at ensuring the future well-being of the population. This is the main difference between sovereign wealth funds and international reserves (the assets accumulated in foreign currency by a country), which are orientated towards liquidity or exchange rate stability, i.e. short-term objectives.
Typically, the origin of these funds comes from the sale of mineral resources and the royalties associated with their exploitation. This is what happened with the first sovereign wealth funds, launched by Kuwait and Saudi Arabia, two countries overly dependent on revenues from oil, which is a finite resource. And a few years later, Norway came along, whose Sovereign Wealth Fund is the most valuable in the world and the great benchmark in terms of management strategy, quality and transparency.
Later, other types of sovereign wealth funds emerged, particularly in Asia, where revenues come mainly from fiscal surpluses or surpluses. It should be noted, however, that not all funds are aimed at future savings. Some aim, for example, to protect countries from the volatility of external markets or economic crises, others to help diversify the economy and social development in the long term.
The ten largest sovereign wealth funds in the world
Currently, the countries with the largest sovereign wealth funds in the world are Norway (Europe), China and Singapore (Asia) and Saudi Arabia, the United Arab Emirates, Kuwait and Qatar (Middle East).
The global leader by assets is Norway’s Government Pension Fund Global (GPFG), with 1.4 trillion dollars invested, according to Global SWF. Founded in 1997, the capital comes from part of the revenues from oil and gas extraction and the main objective is to guarantee the future sustainability of pensions.
The second largest is the China Investment Corporation (CIC), with assets valued at 1.2 billion dollars. Created in 2007, it has three subsidiaries: the one that manages holdings in the country’s largest financial institutions, the one that supports exports and the internationalisation of Chinese companies and the one aimed at investments abroad.
The third in the ranking, also Chinese and with assets of over a billion dollars, is SAFE Investment, which belongs to the central bank and controls foreign currency and gold reserves.
In the Middle East, the most valuable fund is the Abu Dhabi Investment Authority (ADIA), founded in 1967 and with assets under management of 984 billion dollars. Its capital comes from oil surpluses and it is one of the world’s largest investors in property, infrastructure and private equity. The Kuwait Investment Authority (KIA) is the oldest (it was created in 1953) and plays a central role in the country’s financial system.
Rank Sovereign Wealth Fund – Country Assets (billion USD) Year
- Norway Government Pension Fund Global (NBIM) Norway 1 379 1990
- China Investment Corporation (CIC) China 1 240 2007
- SAFE Investment Company (SAFE IC) China 1 082 1997
- Abu Dhabi Investment Authority (ADIA) United Arab Emirates 984 1967
- Kuwait Investment Authority (KIA) Kuwait 801 1953
- GIC Private Limited (GIC) Singapore 769 1981
- Public Investment Fund (PIF) Saudi Arabia 700 1971
- Qatar Investment Authority (QIA) Qatar 429 2005
- Investment Corporation of DubaI (ICD) United Arab Emirates 341 2006
- Temasek Singapore 288 1974
Source: Global SWF Data Platform, January 2024
The ten largest sovereign wealth funds in Africa
According to a study published this year by Cleary Gottlieb (a multinational law firm), sovereign wealth funds have been growing in sub-Saharan Africa (15 new funds have been created since 2010). However, total assets amount to 160 million dollars, a relatively low figure on a global scale. Botswana’s Pula Fund and Namibia’s Welwitschia Fund are aimed at monetary stabilisation. They invest mainly in liquidity (bonds and shares) and aim to offset budget deficits.
Nigeria’s Lagos Wealth Fund and Mozambique’s newly created Sovereign Wealth Fund are aimed at saving and creating value for future generations. Finally, Gabon’s FGIS and Angola’s Sovereign Wealth Fund are more geared towards investing in major projects that will develop the national economy.
By assets, the two most valuable are the Libyan Investment Authority (LIA), the 25th largest in the world, with assets valued at 68 billion dollars, and Ethiopia Investment Holdings (EIH), 36th, with 46 billion dollars. The following have significantly lower investment portfolios, most notably the aforementioned Pula Fund, which is the oldest on the continent and has assets of 3.8 billion dollars.
By country, Ghana is the only one with two funds among the 15 largest in Africa. The others are, in that order, Libya, Ethiopia, Botswana, Nigeria, Egypt, Angola, Gabon, Morocco, Senegal, Mauritius, Rwanda, Djibouti and Namibia. It should be noted that in the draft law creating Mozambique’s Sovereign Wealth Fund, the Planning and Budget Commission states that it has studied the cases of Ghana (Ghana Heritage Fund), Botswana (Pula Fund) and Tanzania (Tanzania Petroleum Development Corporation) with particular attention.
Africa Sovereign Wealth Fund – Country – Assets (billion USD) – Year – World
- Libyan Investment Authority (LIA) Libya 68.4 2006 25th
- Ethiopian Investment Holdings (EIH) Ethiopia 46 2022 36th
- Pula Fund Botswana 3.8 1994 68th
- Nigeria Sovereign Investment Authority (NISA) Nigeria 2.5 2011 75th
- Fundo Soberano de Angola (FDSEA) Angola 2 2012 80th
- The Sovereign Fund of Egypt (TSFE) Egypt 2 2018 81st
- Fonds Souverain d’Investissements Strategiques (FGIS) Gabon 1.9 2012 83rd
- Ithmar Capital Morocco 1.8 2011 84th
- Fonds Souverain d’Investissements Stratégiques (FONSIS) Senegal 1.3 2012 87th
- The Ghana Petroleum Funds (GPFs) Ghana 1 2011 91st
Source: Global SWF Data Platform, January 2024
The new Mozambique Sovereign Fund (FSM)
The Mozambique Sovereign Fund (FSM), enacted in January, will be managed by the Bank of Mozambique and will be made up of revenues from the production of liquefied natural gas from areas 1 and 4, offshore in the Rovuma basin, and from future oil and natural gas projects, as well as from the return on investments made by the fund itself.
The law stipulates that during the first 15 years, 60% of the projected revenues for each fiscal year will be transferred to the State Budget and 40% channelled to the WSF, and that thereafter this percentage will be divided into 50%.
Knowing, as the government says, that “annual gas exports could amount to around 91.7 billion nominal dollars over the life of the project” and that 40% or 50% of the revenue will go to the fund, this means, in simplistic terms, that the WSF has the potential to enter this ranking of the largest in Africa in a relatively short time. It remains to be seen when.
