Djiboutian sovereign wealth fund commences operations
The country aims to use the Fund to invest and co-invest in key sectors of the economy such as telecommunications, new technologies, energy, infrastructure, logistics, agriculture and fishing.
The Republic of Djibouti announced on Tuesday that the Fonds Souverain de Djibouti (FSD), or the Djibouti Sovereign Wealth Fund, has officially commenced operations. The government also announced the appointment of Mamadou Mbaye as the first Managing Director of the FSD.
Djibouti joined the club of sovereign wealth funds (SWFs) on June 24, 2020 when the FSD was created. While the government did not state how it would raise the funding for the SWF, it disclosed that there will be “significant initial investment with recurring resources.” The government is targeting to have assets under management of up to $1.5 billion within a decade.
“Despite the global health crisis related to the coronavirus pandemic, the country is determined, more than ever, to invest in the future and tomorrow’s economy,” the government said back in June.
Established in the form of a public limited company under private law, the sole shareholder of the SWF will remain the State of Djibouti. The Fund’s purpose and missions are fully aligned with the country’s development goals. According to a statement released by the government on Tuesday, the FSD was created to support the achievement of Djibouti’s Vision 2035 – a long-term development plan aimed at positioning the country as a leading commercial, logistics, port and digital hub.
The mandate of the FSD is to mobilise national wealth in order to increase the country’s capacity to optimally and efficiently invest in projects that advance the national and strategic interests of Djibouti. The country aims to use the Fund to invest and co-invest in key sectors of the economy such as telecommunications, new technologies, energy, infrastructure, logistics, agriculture and fishing. According to the government statement, the FSD will target investments locally and in neighbouring countries in the Horn of Africa.
The launch of the operations of the FSD took place on Monday, September 14, following an inter-ministerial meeting that was held under the leadership of the Djiboutian President Ismaël Omar Guelleh. Other participants were the Prime Minister, Abdoulkader Kamil Mohamed, other government officials and the Fund's administrators.
Among the personalities present were senior executives of SouthBridge, an Abidjan-headquartered pan-African investment bank that advised Djibouti on setting up the FSD. Co-chairmen of SouthBridge, Donald Kaberuka (former President of African Development Bank) and Lionel Zinsou (former Prime Minister of Benin), as well as William Ediko, Partner at SouthBridge, participated in the meeting. Also present was Amir Jahanguiri, Partner at Willkie Farr & Gallagher, a New York-based law firm that represented Djibouti in the creation of the sovereign wealth fund.
The new Managing Director was also present during the meeting. Mbaye is a Senegalese and a former Vice President of the Sovereign Fund for Strategic Investments of Senegal (FONSIS), the Senegalese SWF. He is a graduate of École Polytechnique and École nationale de la statistique et de l'administration économique (ENSAE) in France.
Djibouti's natural resources include gold, granite, limestone, and marble. The country has also embarked on petroleum exploration. The FSD is expected to help in driving the diversification of the economy and building reserves for future generations.
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