(Ecofin Agency) - Two weeks ago, at the Riyadh Carlton Ritz, in Saudi Arabia, the country’s government regrouped many investment funds managers, as well as investors, many of whom have assets in Africa, to introduce them its sovereign fund.

Named Public Investment Fund (PIF), the entity intends to be one of the most important worldwide, with an estimated projected commitment portfolio of $400 billion by 2020. With this fund, Saudi Arabia, for the first time, positions itself as an international institutional investor, with ambitions that could align with Africa’s development.

It will seek investment opportunities with profitability rates ranging between 8% and 9%, which are not offered by many regions. In parallel, it does not focus on short term profitability. As such, it is an ideal investor for Africa where long term investment is much needed to spark an actual growth.

With this fund, Saudi Arabia also attests of its desire to diversify its economy, which depends only on oil. Moreover, it seems that the kingdom has understood, though later than other Gulf nations such as the United Arab Emirates, or its new enemy, Qatar, how important it is to be present in Africa, both in terms of economic and geostrategic advantages.

Africa for its part, in addition to augmenting its foreign direct investments inflow, will also get a new major investor. Sovereign funds are known to be well managed and efficient in selecting opportunities. With a heavyweight like the PIF, it is very likely that other investors’ appetite will be increased.

Idriss Linge