Norway Oil Fund Under Lawmaker Pressure to Buy More in Africa

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Norway’s Christian Democrats, a key support party for the minority government, called on the nation’s sovereign wealth fund to steer more of its $810 billion in assets into Africa to reap better returns.

The party wants to set aside 10 billion kroner ($1.6 billion) of the fund’s cash for African purchases as a “starting point” for a debate on how much should be invested there, Knut Arild Hareide, leader of the Christian Democrats, said in a Dec. 6 interview.

“When we make these investments in Africa, it’s good for those countries,” Hareide said. “It has also been better for us to invest in Africa over the last years than in Europe,” where a recession has hurt returns, he said.

Norway’s wealth fund, which got its first capital infusion in 1996 to invest the country’s oil wealth outside its borders, is in the midst of a shift in strategy to capture more global growth. It’s moving asset allocation away from Europe as emerging markets in Asia and South America gain a bigger share of global output.

At the end of September, the fund held 9.6 percent of its stock portfolio in emerging market countries, including 0.6 percent in South Africa.

The FTSE/JSE Africa All-Share Index, the benchmark index in Johannesburg, has risen 350 percent over the past 10 years, compared with 40 percent for the Stoxx Europe 600 Index.

White Paper

Hareide’s push to increase investments in Africa comes as the new government prepares its first annual white paper on the fund for parliament. Hareide expects his proposal will be part of the paper, which he said will be released by May.

Finance Minister Siv Jensen in an interview last month said the government will stick to the existing investment mandate.

“We aim at a predictable and stable investment strategy for the fund,” Jensen said.

The Labor Party, the biggest opposition party, also plans to release its own white paper ahead of the government with proposals including divesting coal companies, which the Christian Democrats would support, Hareide said.

Story by Bloomberg

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