Ekurhuleni: Sovereign Wealth Funds (SWFs) have emerged as critical tools for addressing the infrastructure financing gap in Africa, with potential benefits for industrialisation, infrastructure expansion, and social development, according to Dr. David Masondo, Deputy Minister of Finance.
According to South African Government News Agency, Dr. Masondo highlighted the role of SWFs during the Group Twenty (G20) Social Summit side event in Ekurhuleni. He noted that Sub-Saharan African countries currently allocate only 3.5% of their Gross Domestic Product (GDP) to infrastructure annually, falling short of the 7.1% required to achieve the Sustainable Development Goals (SDGs). These goals aim to tackle global issues such as poverty, health, education, and environmental sustainability.
The Deputy Minister pointed out the continent’s significant infrastructure funding gap, estimated at US$130-170 billion per year, with only US$80 billion currently accessible. Traditional financing methods like national budgets and concessional loans are proving insufficient. Dr. Masondo advocated for a new mix of capital and risk-sharing, where SWFs act as catalytic investors.
Highlighting the potential of SWFs, Dr. Masondo stated they could accelerate development across Africa by promoting investment, stabilising fiscal systems, and leveraging global partnerships. The International Monetary Fund (IMF) reports a 7% decline in external funding to Sub-Saharan Africa, further emphasizing the need for SWFs.
Properly structured SWFs offer several advantages, including resilience against market volatility and the ability to attract foreign direct investment. Dr. Masondo stressed that these funds could align with Africa’s Agenda 2063, prioritising infrastructure, industrialisation, and the transition to a green economy.
He also underscored the opportunity for SWFs to invest in renewable energy and sustainable agriculture, contributing to financial returns and advancing energy security and climate action. Examples of successful SWF initiatives include Morocco’s Green Growth Infrastructure Facility and Senegal’s Sovereign Wealth Fund for Strategic Investments.
South Africa’s G20 Presidency has focused on establishing more African SWFs and raising awareness of Africa’s development financing needs. Despite the modest scale of African SWFs, which account for just 0.24% of global assets, their potential impact on the continent is significant.
Dr. Masondo called for SWFs to be transparent, professionally governed, and socially impactful, promoting Environmental, Social, and Governance (ESG) outcomes alongside financial returns. He emphasized the importance of partnerships with global investors and financial institutions to achieve tangible results for communities.
The G20 Social Summit, hosted by South Africa from 18 to 20 November 2025, brings together diverse stakeholders to address global issues impacting daily lives. Under the theme ‘Solidarity, Equality, and Sustainability,’ the summit aims to elevate social development and inclusion to the forefront of the G20 agenda.