Catalyzing Digital Economy in Africa: The Role of African Sovereign Wealth Funds

Abstract

Over the past few years, Sovereign Wealth Funds (SWFs) have become major investors in digital technologies and the digital economy. For instance, the Public Investment Fund of Saudi Arabia invested billions of dollars in global tech giants like the ride-hailing company, Uber and the electric car maker, Tesla as well as Vision Fund, SoftBank’s multi-billion dollars tech-focused venture capital fund. In addition to global technology investments, SWFs, especially those from developing countries, have been increasingly investing in their domestic innovative and digital economies, with a view to boosting innovation and diversifying the economies of their respective countries. In this paper, the author considers the potential role of African SWFs in promoting digital transformation and the digital economy in the continent. Specifically, the paper argues that African SWFs (given their long investment horizon and large pool of capital among others) are well-placed to become key drivers of innovation and the digital economy in their respective countries and in Africa as a whole, by among other things, allocating substantial portion of their assets under management digital infrastructure development and provision of venture financing to their respective entrepreneurial and innovative economies.