The Role of Sovereign Wealth Funds in Latin America. Despite having some of the world’s most valuable natural resources, Latin America has lagged in using sovereign wealth funds as a tool for long-term development and stability. Unlike Africa and Southeast Asia, where sovereign vehicles are being used to catalyze growth and attract FDI.
The Role of Sovereign Wealth Funds in Latin America
Despite having some of the world’s most valuable natural resources, Latin America has lagged in using sovereign wealth funds as a tool for long-term development and stability. Unlike Africa and Southeast Asia, where sovereign vehicles are being used to catalyze growth and attract FDI, nearly all of Latin America’s 12 SWFs remain traditional stabilization funds, designed for short-term fiscal smoothing rather than future-focused investment.
50% of Latin America's population is under 30, but intergenerational savings are still rare.
$8.6B in Chile’s Pension Reserve Fund and $5.5B in Trinidad and Tobago’s Stabilization Fund are among the largest.
Guyana’s fund amassed $2B in four years, driven by oil revenues — a regional outlier in growth and intent.
Crisis-Proofing vs. Future-Proofing
The COVID-19 pandemic showed the value of stabilization funds. For instance,
Chile withdrew over $2B to support its budget, and Colombia reallocated $3B from its SWF to pandemic relief.
Unlike Gulf countries that built up surpluses from oil revenues, Latin American countries have averaged deficits of 3% of GDP since 2010.
But most funds lack the scale, structure, or mandate to invest for the long term or drive national development agendas. In many cases, 95%+ of fund assets are funneled into immediate government budgets, as seen in Mexico’s FMPED.
The Missed Strategic Opportunity
Latin America holds more than half the world’s lithium, essential to the green energy transition. But unlike African funds that are partnering with global investors, Latin America still lacks strategic investment funds that mobilize private capital and fund domestic development.
Brazil’s state-level fund in Espírito Santo (FUNSES) is combining long-term savings with venture-style development, allocating capital to local startups in ESG and tech sectors. $150M in initial investments are being deployed through non-convertible debentures that aim to crowd in private sector capital.
🌱 Bioinputs: A Sustainable Investment Opportunity in Latin America
Rapid Market Growth – Bioinputs sales in LatAm surged from 2017 to 2021, with biopesticides reaching $683M and biostimulants/biofertilizers at $418M in 2021.
Widespread Adoption – Farmers are driven by goals to preserve soil fertility (79.5%) and reduce environmental impact (65.8%).
Environmental Benefits – Bioinputs reduce agrochemical use and improve soil health, supporting biodiversity and climate resilience.
Innovation & Policy Support – Advances in biochemistry and growing government support are helping scale this eco-friendly alternative.
