Sovereign Wealth Funds and Natural Resource Management in Africa

Abstract

Non-renewable resources dominate nearly one quarter of the world's economies. Over half of these economies are developing, with many in Africa. Managing resource revenues is one of the most pressing challenges facing policymakers in Africa. For over a decade, these countries have been advised to follow 'the Norwegian model', saving resource revenues abroad, in offshore sovereign wealth funds for future generations. The three papers in this issue challenge that view. Together, they argue that there are three key motives for saving revenues abroad: intergenerational transfer, parking and stabilisation. The paper by Venables and Wills shows that only the second two are relevant for developing countries, which have pressing needs at home, arguing that revenues should be directed toward domestic investment to accelerate the countries along their development path. There are, however, other potential motives for investing resource rents offshore, in addition to intergenerational transfer...