What Is the Revenue Regulation Fund (RRF)?
The Revenue Regulation Fund (RRF) is the sovereign wealth fund for the nation of Algeria. It is Africa's largest sovereign wealth fund. The source of its funding is tax revenue collected from companies exploiting the nation's oil and gas reserves.
Sovereign wealth funds in general are state-owned investment vehicles. They invest globally and are used to broaden a nation's economy as well as to raise funds for government operations. This can be especially important to a nation whose wealth is concentrated on a particular finite resource, such as oil.
Algeria's Revenue Regulation Fund is also known as the Fond de Regulation des Recettes.
- Algeria's Revenue Regulation Fund is Africa's largest sovereign wealth fund at $60 billion.
- Its purpose is to raise funding for the government and broaden the nation's economy, which is dependant on oil revenues.
- Libya's sovereign wealth fund is second in Africa, at about $60 billion.
Understanding the Revenue Regulation Fund
Founded in 2000, Algeria's Revenue Regulation Fund originates from surplus revenues earned from taxes on the development of Algeria's hydrocarbons, primarily its oil and gas reserves.
Like most such funds, it operates largely out of the public eye and its operations are wrapped in secrecy. It had about $72.6 billion in assets in 2019, according to Ressources, a French-language magazine that covers natural resources industries in Africa.
Other Sovereign Wealth Funds
That makes it the largest sovereign wealth fund in Africa, followed by that of another oil-rich nation, Libya, with about $60 billion in assets. Much smaller funds are run by the governments of Botswana ($5.5 billion), Angola ($2.3 billion), and Nigeria ($1.7 billion).
The Revenue Regulation Fund was established primarily to act as an economic stabilization factor to cushion the impact of volatility in oil and gas prices on the government of Algeria.
The Brown Capital Management Africa Forum noted that there has been an increased interest in state-sponsored investment funds like the RRF over the past 20 years. They tend to be established in response to high commodity prices or large foreign exchange reserves.
Although some investment funds are recent creations by developing nations, others are well established. Africa’s many sovereign wealth funds are relatively new and volatile.
The People's Democratic Republic of Algeria is a former French colony with a population of about 45 million. It achieved its independence from France after a devastating war that lasted from 1954 to 1962.
It is Africa's largest nation in landmass, although the Sahara Desert makes up four-fifths of its nation. Most of the population is clustered along the Mediterranean Coast.
A predominantly Muslim country, Algeria is ruled by a group of unelected civilian and military "deciders" and a weak and ailing president.