Africa’s banking sector remains under-leveraged despite holding an estimated $2.5 trillion in total assets, limiting its ability to finance long-term development projects, according to the latest State of Africa’s Infrastructure (SAI) Report published by the Africa Finance Corporation (AFC).
The 2025 report noted challenges within the sector, including fragmentation and insufficient scale, which continue to hinder efforts to close the savings-investment gap and unlock the financing necessary for large-scale infrastructure and industrial development across the continent.
AFC’s findings emphasize the urgent need to strengthen African banks, positioning them as key players in mobilizing capital to support structural transformation and economic growth.
Strengthening Banks and Public Financial Institutions
The report also highlights the important but underutilized role of public development banks and sovereign wealth funds in driving Africa’s financial priorities.
“Collectively managing some $400 billion, these institutions are often underutilized due to fragmented mandates and weak alignment with national development plans,” the report states.
Emerging financial models, such as the expanding role of Caisses de Dépôts in the CFA franc zone, are being recognized as promising frameworks for mobilizing domestic savings through mission-driven financial intermediation, tailored to Africa’s specific economic realities.
Unlocking Africa’s Capital Potential
Commenting on the report’s findings, Samaila Zubairu, President and CEO of AFC, outlined a roadmap for leveraging Africa’s financial strength to accelerate industrial transformation.
“New AFC Research confirms that Africa already holds the resources to accelerate this journey. We estimate the continent’s domestic capital pools at over $4 trillion, including more than $1.6 trillion across the non-bank sector: $455 billion in pensions, $320 billion in insurance, $250 billion in public development banks, $150 billion in sovereign wealth funds, and $473 billion in foreign reserves, including $38 billion in gold holdings,” Zubairu stated.
What you should know
The latest SAI Report provides a conservative estimate of over $1.1 trillion in long-term institutional capital from pensions, insurance, sovereign wealth funds, and public development banks, along with $2.5 trillion in commercial banking assets and over $470 billion in central bank reserves.
- It noted that despite the scale of these resources, most investments are allocated to low-risk and short-term instruments rather than being channelled into the real economy.
- The AFC’s report called for targeted policy reforms, financial innovation, increased use of risk-mitigation tools, and the creation of financial structures, such as pooled funds or investment platforms, to reposition African institutions at the heart of the continent’s infrastructure transformation.
Since its inception, the AFC has contributed to Africa’s financial landscape, boasting 45 member countries and over $15 billion in investments across 36 African nations.
