Africa holds over $4 trillion in domestic capital that remains largely untapped for transformative development. This is the central message of the Africa Finance Corporation’s 2025 State of Africa’s Infrastructure Report, which calls for a fundamental shift in how the continent finances its future.
With tightening global financial conditions and declining flows of concessional and private capital, the report argues that African governments, financial institutions, and regulators must urgently reconfigure their economies to channel local savings into long-term infrastructure and industrial projects.
“Africa’s infrastructure challenge is not merely a gap to close, it is a generational opportunity to shape new markets, catalyze investment, and lay the foundations for broad-based, sovereign-led prosperity,” writes AFC President and CEO, Samaila Zubairu, in the foreword.
A Landscape of Capital, Locked in Short-Term Cycles
According to the report, Africa’s domestic non-bank financial system, including pension funds, insurance companies, sovereign wealth funds, development banks, and diaspora remittances, holds over $1.6 trillion in assets. Add to this broader pools of bank liquidity and state revenues, and the continent’s total investable capital exceeds $4 trillion.
Yet most of these assets remain parked in short-term instruments such as government bonds and treasury bills. In markets like Ghana, Kenya, and Nigeria, pension funds and insurance companies are required, or inclined, to invest primarily in sovereign debt, even when real returns are eroded by inflation or currency risk.
This mismatch, the report argues, limits the ability of African economies to finance strategic, long-term investments in energy, transport, digital infrastructure, and manufacturing, sectors vital to job creation, industrialisation, and resilience.
Lessons from the East: Saving to Transform
The AFC draws clear parallels between Africa’s current position and that of East and Southeast Asia in the second half of the 20th century. Countries like South Korea, Malaysia, and Singapore transformed their economies through deliberate policy frameworks that aligned domestic savings with national development plans.
These economies grew savings rates to over 40% of GDP and built financial institutions capable of allocating capital to productive sectors. Africa, with its vast youth population and resource endowments, the report says, can follow a similar trajectory, provided it reforms how capital is mobilised and where it is directed.
Reform Models Already Working
Some African countries have begun to chart new ground:
- Nigeria’s InfraCredit, a guarantee institution backed by public and private partners, has grown infrastructure investment from $6 million in 2017 to $155 million in 2024, by making bonds bankable for local pension funds.
- Namibia’s Regulation 29 compels pension funds to invest part of their assets in unlisted domestic assets, supporting local industry and fund managers.
- Kenya’s micro-pension platforms, integrated with M-Pesa, are enrolling informal sector workers into formal savings, creating a new class of long-term capital.
These models demonstrate that reforms, when supported by the right regulatory and institutional frameworks, can unlock billions in patient capital without relying on external aid or borrowing.
Informality: The Hidden Frontier
The report devotes significant attention to Africa’s vast informal economy, where more than 80% of workers operate without access to pensions, insurance, or formal banking. It estimates that formalising just the lower bound of Africa’s informal sector could generate over $200 billion in additional investable assets.
Digital platforms are playing a critical role here. In Kenya, for instance, over 45% of mobile money users now report using digital wallets to save, illustrating how digital public infrastructure (DPI), including mobile payments, digital ID, and data registries, can serve as an on-ramp for financial inclusion and capital mobilisation.
From External Dependency to Domestic Sovereignty
The overarching message of the 2025 report is that Africa must transition from being a net importer of capital to a continent financing its own ambitions. This will require:
- Deepening capital markets and financial product innovation
- Revising asset allocation rules for institutional investors
- Building local capacity in fund management and project finance
- Harnessing digital infrastructure to include informal savers
- Aligning fiscal and financial policy with long-term development goals
“The time has come for African governments, investors, and institutions to build financial systems…deep, inclusive, and capable of driving transformation from within,” the report concludes.
With multilateral lending tightening and external financing becoming more conditional and expensive, the AFC’s report provides a blueprint for a sovereign-led, infrastructure-driven growth model that relies on Africa’s own resources, capitalising not only on what the continent has, but on what it can become.
