Unofficial sovereign wealth funds and duration in power in Africa
This paper argues that in weak states, leaders whose hold on power is secured by the public fortune have turned to the use of sovereign wealth funds (SWFs), especially unofficial SWFs, to cement their hold on power.
Unofficial SWFs are private funds created from resource rents with the appearance of public investment-holding firms that use governmental legitimacy to invest at home and abroad, managed indirectly by political leaders or their families in order to advance a political agenda, wealth accumulation, patronage, repression, and loyalty.
Using a survival model covering 73 leaders in 32 countries between 2000–15, we investigate the effects of SWFs on duration in power. Regressions suggest that unofficial SWFs increase leaders’ time in power to a greater degree than official SWFs. Results remain consistent after a battery of control test for robustness. However, leaders’ behaviour through the use of unofficial SWFs is not inconsistent with economic growth, at least in the short run, and can foster relative political stability and peace.