The Africa Finance Corporation (AFC) has called on African governments and institutions to unlock up to $4 trillion of domestic assets, including pension funds, to address the continent’s vast infrastructure financing gap. The Lagos-based multilateral lender said relying on external borrowing is unsustainable, urging instead a focus on mobilising local capital to support long-term development.
The scale of Africa’s infrastructure needs
The African Development Bank estimates the continent faces an annual infrastructure financing gap of between $68 billion and $108 billion. Projects in transport, energy, and digital connectivity remain underfunded, limiting growth prospects and regional integration. AFC President and Chief Executive Samaila Zubairu stressed that tapping into domestic resources was critical to meeting these needs without deepening sovereign debt burdens.
Domestic capital as a solution
According to the AFC, Africa holds an estimated $4 trillion in assets, much of it sitting in pension funds, sovereign wealth funds, and insurance pools. These funds are often invested in low-yielding assets abroad rather than channelled into local infrastructure. Redirecting even a fraction of these resources could provide the patient capital required for projects with long payback periods. The AFC argues that reforms to regulatory frameworks and risk-sharing mechanisms are essential to encourage institutional investors to commit capital at scale.
Reducing dependence on external financing
Many African countries have relied heavily on external debt and concessional loans to fund infrastructure, but rising global interest rates and currency pressures have made this model less viable. The AFC emphasised that domestic resource mobilisation not only reduces dependence on foreign lenders but also ensures that African citizens directly benefit from the returns on infrastructure investment. By creating transparent, well-structured vehicles, governments can unlock local participation while attracting complementary international investment.
Examples of progress
Some African pension funds and institutional investors have already begun allocating capital to infrastructure projects, particularly in energy and transport. In Nigeria and Kenya, local pension funds have committed resources to renewable energy and toll road projects, demonstrating the feasibility of such strategies. The AFC is working to expand these models across the continent, leveraging blended finance and credit enhancements to reduce perceived risks.
Looking ahead
The AFC’s call reflects growing recognition that Africa must look inward to finance its development priorities. While international capital remains important, domestic assets represent an untapped pool that could transform the continent’s infrastructure landscape. Unlocking these funds will require political will, regulatory reform, and innovative financing structures, but the potential benefits in terms of growth, job creation, and improved living standards are considerable.
Newshub, 8 September 2025
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