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Working Paper 142 - Africa’s Quest for Development: Can Sovereign Wealth Funds Help?
Sovereign Wealth Funds (SWFs) have emerged as potential solutions to actively manage foreign reserves accumulated from commodity sales or strong exports. They correspond to government-owned investment vehicles managed by a state-controlled entity or external managers, on behalf of a nation, to serve primarily medium to long term economic and financial objectives. Their existence could be traced back to the 1950’s when Kuwait established in 1953 a SWF to manage its foreign reserves. Impressive growth in the size of SWFs assets and the recent eye-popping cash infusions they made into high profile Western financial institutions like Morgan Stanley, Citigroup, UBS and the Blackstone group, to mitigate the negative effects of the financial crisis, helped spur the phenomenal increase in their popularity.