Africa has the money… now it must learn how to use it

Institutional investors are driving much of the growth in domestic capital. Pension and insurance assets have now surpassed $1 trillion for the first time

Nairobi, Kenya | THE INDEPENDENT |  Africa’s domestic capital has grown to a point where it now exceeds external financing flows, marking a shift in how the continent could fund its development, a new report suggests.

The Africa Finance Corporation’s State of Africa’s Infrastructure Report 2026 says local, non-bank capital pools now stand at more than $2 trillion. That compares with about $1.7 trillion in external funding that flowed into the continent between 2014 and 2024.

The report was launched at the Africa We Build Summit in Nairobi, co-hosted by AFC and Kenya’s President, William Ruto, on April.23.

It argues that Africa’s main economic challenge is changing. Rather than raising capital, the focus is now on how to use it effectively, particularly how to channel savings into infrastructure and industry.

“The constraint is no longer capital—it is intermediation,” Samaila Zubairu, President & CEO of AFC, said at The Africa We Build Summit.

“We have the savings, but not yet the systems to channel them into infrastructure and industry at scale. Closing that gap is now Africa’s most important economic task. The next phase of Africa’s infrastructure story must move beyond standalone assets towards integrated systems.”

Growth in local capital

Much of the growth in domestic capital is being driven by institutional investors. Pension and insurance assets have now surpassed $1 trillion for the first time.

Public development banks hold about $276 billion, while sovereign wealth funds account for $164 billion. Central bank reserves have also increased, rising from $480 billion in 2024 to $530 billion in 2025.

Higher commodity prices and increased gold holdings have contributed to this growth. Gold now makes up around 17% of Africa’s reserves, up from less than 10% just a few years ago.

However, the report notes that much of this capital is held in low-risk, short term investments such as government securities. This reflects a lack of suitable long-term projects, as well as regulatory systems that favour liquidity.

The result is a gap between the amount of money available and the level of investment in long-term development.
Decline in external funding

At the same time, external financing is becoming less predictable. Official development assistance to Africa fell from $83.8 billion in 2020 to $73.5 billion in 2023, and is expected to decline further. Globally, aid dropped by more than 23% in 2025, according to the OECD, the largest annual fall on record.

Borrowing from international markets has also slowed. African sovereign bond issuance has dropped from more than $29 billion in 2018 to between $4 billion and $6 billion annually in recent years.

Foreign direct investment has remained relatively stable, at around $45 billion to $55 billion a year, but this is not enough to meet the continent’s wider investment needs.

As a result, the report says external financing is becoming less central to Africa’s development and more of a complementary source of funding.

Focus on integrated infrastructure

The report highlights infrastructure as a key area where domestic capital could be deployed more effectively.

It suggests that projects should move beyond standalone investments and instead focus on integrated systems. In transport, this means linking ports, railways, roads and logistics networks to industrial activity.

East Africa is given as an example. The port of Mombasa handles more than 45 million tonnes of cargo each year, while rail projects are extending connections inland, including along the Naivasha Kisumu corridor.

In aviation, the sector is seen as a fast way to improve regional integration. In Kenya, Rwanda and Ethiopia, it contributes about $5.5 billion to the economy and supports around one million jobs.

In the energy sector, the report says the focus should shift from simply increasing power generation to building systems that connect generation, transmission and demand. Cross border projects, such as the Ethiopia Kenya interconnector, are highlighted as examples.
Building resilience

Recent global shocks, including the Russia-Ukraine war and the 2026 Gulf crisis, have exposed weaknesses in Africa’s supply chains.

The continent still imports more than 70% of its refined fuel and faces an estimated $230 billion annual import bill for essential goods such as food, fertiliser and steel.

The report says this underlines the need to invest in domestic processing, storage and supply chains.

In digital infrastructure, while internet access has expanded, there are still gaps in systems such as fibre networks and data centres. Addressing these could help turn connectivity into economic growth and job creation.

Overall, the report concludes that Africa’s development challenge is no longer about a lack of capital, but about how effectively it is used.

“Africa is not capital-poor—it is capital-rich but system-poor,” said Zubairu. “The priority must be to build the institutions, instruments, and project pipelines required to deploy that capital into infrastructure and industry at scale.”