Africa’s sovereign wealth funds (SWFs), currently valued at over $150 billion, remain significantly underutilised in financing infrastructure and industrial development, according to the 2025 State of Africa’s Infrastructure Report released by the Africa Finance Corporation (AFC). SWFs are state-owned investment fund that governments use to invest surplus revenues and other financial reserves
The report argues that SWFs in Africa have grown steadily over the past two decades, but most continue to allocate capital conservatively, investing in foreign securities, low-risk fixed income, or offshore real estate, rather than in transformative domestic projects.
This conservative approach, the AFC notes, is in sharp contrast to the continent’s urgent infrastructure financing needs, which exceed $100 billion annually. With concessional financing declining and private capital becoming more risk-averse, African SWFs could play a pivotal role in closing the gap if properly aligned with national development priorities.
Per the report, Africa has built up substantial sovereign capital buffers, but they remain parked in external markets with limited impact on domestic transformation.
Capital Out, Needs In
The mismatch is stark: while roads, ports, power grids, and industrial zones across Africa struggle for financing, SWFs in countries such as Angola, Nigeria, Botswana, Algeria, and Ghana continue to invest significant portions of their assets abroad. This is often driven by risk-averse mandates, political caution, or the desire to preserve capital through external diversification.
However, the AFC contends that part of this capital, particularly stabilisation and intergenerational savings components, can be strategically allocated to national or regional infrastructure, especially through co-investment platforms, public-private partnerships, and de-risked vehicles.
Reforming Investment Mandates
The report recommends that African countries review their SWF legislation and investment guidelines to:
- Allow for higher allocations to domestic infrastructure and productive sectors
- Establish governance frameworks that balance return objectives with development goals
- Channel a portion of SWF funds into regional investment platforms such as AFC or Afreximbank
- Promote blended finance models where SWFs anchor private capital in large-scale projects
Some countries are already moving in this direction. Rwanda’s Agaciro Development Fund, Nigeria’s Sovereign Investment Authority (NSIA), and Morocco’s Ithmar Capital have initiated local infrastructure investments through joint ventures, strategic equity stakes, and project-specific financing.
Still, these remain exceptions rather than the rule. The AFC argues that with rising global interest rates and more conditional external funding, Africa’s future infrastructure strategy must lean more heavily on domestic capital, including sovereign reserves.
Towards a Continental Investment Strategy
The report calls for the establishment of pan-African SWF coordination frameworks to:
- Share best practices in governance and risk management
- Co-invest in cross-border infrastructure such as transport corridors and energy pools
- Align SWF investments with Agenda 2063, the AfCFTA, and national industrial strategies
Such coordination, the report notes, could also help crowd in private capital by giving infrastructure projects the early-stage patient capital needed to reach bankability.
