African central bank governors to discuss sovereign wealth funds

Central bank governors drawn mainly from eastern and southern Africa will meet for a workshop to discuss the leveraging of sovereign wealth funds to establish economic stabilization on the continent.

Reserve Bank of Zimbabwe John Mangudya will officially open the forum held in Switzerland on June 27, according to the forum's organizer, the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), which operates in 14 African countries.

"We are delighted to be hosting our member countries as well as some visiting countries' central bank governors to discuss this most important issue which will help to establish long-term prosperity on our continent," Caleb Fundanga, executive director of the MEFMI, told Xinhua Wednesday.

Fundanga said Africa had long been criticized for not having utilized its natural resources wealth well enough to ensure sustainable and positive change in its economies. And sovereign wealth funds were seen as one avenue of achieving this.

A sovereign wealth fund is a state-owned investment fund investing in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds.

Discussions will be driven by research conducted by international specialist banking and asset management group Investec's Investment Institute and the Center for International Development, as well as the Belfer Center at Harvard University.

"Africa's resource wealth is a great asset to the continent, but it is crucial that it is best used to ensure long-term and sustainable economic wealth for these countries, even in times of commodity price weakness," said Katherine Tweedie, executive director of the Investec Investment Institute.

Fundanga said the research focussed on the structures, policies and operations of sovereign wealth funds.

The World Bank Treasury will also make a presentation on the role of central banks in sovereign wealth management.

"The message from the resultant research reports is that all is not lost in terms of the momentum behind Africa's emerging sovereign wealth funds, even following the lull in commodity prices. If African governments continue to sow the seeds of fiscal reform today, the benefits will be reaped when it matters – by the time the next resource boom arrives," Fundanga said.

Zimbabwe established a sovereign wealth fund in 2014 to be funded from up to a quarter of mining royalties in respect of gold, diamonds, coal, coal-bed methane gas, nickel, chrome, platinum and such other mineral that may be specified, mineral dividends and government grants. Endi