Senegal Invests Its Sovereign Wealth Fund in Neighboring Countries

Senegal has announced that it will utilize its sovereign wealth fund to invest in neighboring countries.

Its sovereign wealth fund receives proceeds from the sale of oil and gas from its new fields.

According to the International Monetary Fund, over 1 billion barrels of oil and 40000 cubic feet of gas were found between 2014 and 2017.

Sovereign wealth funds are state-owned funds that utilize a percentage of state revenue to invest in financial and real assets such as precious metals, real estate, private equity funds, stocks, and bonds.

In some countries, the sovereign wealth fund is held by the central bank. Norway is known to have the largest sovereign wealth fund in the world with 1.3 trillion in assets under management across the world.

The country is banking on the production of oil and gas to boost Senegal’s economic growth and facilitate the sovereign wealth fund.

Senegal’s finance minister Amadou Hott announced that the country will set aside a minimum of 10 percent of the oil and gas revenues to the fund. The law in Senegal allows an investment of 25 percent of the assets under management abroad.

Countries in the West African region that will benefit from the investment of the Senegalese wealth fund are countries that share the CFA franc currency.

Fonds Souverain d’Investissements Stratégiques (FONSIS), will add more income for the fund as it seeks to invest domestically over USD 500 million.

FONSIS had launched a USD 106 million fund that targets small and medium-sized enterprises (SMEs). The fund has USD 650 million worth of assets under management with an infrastructure fund underway to reduce risks and attract more investors.

FONSIS had collaborated with the International Finance Corporation (IFC), a subsidiary of the World Bank that offers investment advice to developing countries, to develop affordable housing in the country through rent-to-own schemes.