ABSTRACT
Lauded as “rainy-day funds” for governments, sovereign wealth funds (SWFs) have been viewed as a responsible fiscal policy tool for resource-dependent economies. Crises such as COVID-19 are among the main reasons for a country to create an SWF and while African countries have been prolific in creating funds, they have been less successful in funding them after initial capitalization. Funds created in Nigeria and Ghana fit this description. The lack of further capitalization has left these “rainy-day funds” unable to adequately respond to the challenges surfaced by the COVID-19 crisis and raised questions regarding their future purpose as tools for fiscal stabilization. This chapter forwards that the root cause of this underfunding is related to the processes by which the SWFs were created and that these processes were led by institutions external to the country, not domestic actors. These processes have left the SWFs bereft of domestic support toward their continued capitalization and, as a result, vulnerable to crises.
