Senegal has a new sovereign
wealth fund. Who knew? Not me. I only learned of the new SWF
yesterday when someone asked me, Hows
Senegals new SWF coming along? To which I replied:
[shoulder shrug]. As it turns out, however, Senegalese MPs
voted to create a new Strategic Investment Fund
(FONSIS) back in December, and the government of Senegal now
lists the new SWF as one of its Grands Projets. So,
this is clearly legit. And that means I need to do some
Upon further scrutiny, the
FONSIS looks and feel more like a sovereign
development fund than a traditional sovereign wealth
fund, as the motivation for launching this vehicle is to unlock
foreign direct investment to revitalize the Senegalese economy.
Anyway, heres a rough translation of the
governmental website describing the new fund:
In a context of
scarcity of direct investment to our country, weak local
private industry and the need for structuring investments and
to effectively manage investments and other assets of the
State, the President of the Republic has decided to establish a
Strategic Sovereign Investment Fund (the "FONSIS"), like some
emerging countries that have had strong economic booms, such as
Singapore, Malaysia, and South Korea...
...The FONSIS invests
primarily in the form of equity alongside private domestic and
foreign investors (it will focus especially on co-investment
with other sovereign wealth funds and strategic partners that
are experts in their industries).
And here is how the state describes the
objectives of the new fund:
To manage state assets effectively;
To help grow state assets and set aside some financial
reserves for future generations;
To distribute regular dividends to the State by ensuring
that its portfolio companies make profits and pay
To be the preferred partner for private investors by
providing the capital required for strategic and
In short, the government of
Senegal will be putting around $1 billion of assets and cash
into the new SDF with the hopes of catalyzing the domestic
economy through foreign co-investment. This is an increasingly common strategy for
governments of capital starved countries, which Senegal
counts itself among; the state really has no oil or mining
revenue to speak of, so the assets in this fund will be pulled
from other areas of the state balance sheet.
And how will it be governed? Here are some ideas from the
It is crucial to have
a highly qualified management and Board of Directors to be able
to quickly organize, execute projects and attract local
partners and maintain international credibility to raise
additional equity financing and debt.
Management must also be
extremely motivated and remunerated according to the highest
standards in the field (taking into account Senegals
realities) with a variable remuneration based on performance.
The CEO, the directors and management must have a profile,
proven experience and be ethical.
That sounds good to me. Still,
it will be very interesting to see how this fund develops in
the years to come...