Africa’s institutional capital pool grew by 25% to over $2 trillion in 2025, but the continent continues to face challenges in financing critical infrastructure projects.
This was disclosed in the Africa Finance Corporation’s (AFC) latest “State of Africa’s Infrastructure Report” released in Nairobi.
The development highlights a growing disconnect between rising capital reserves and the continent’s ability to channel funds into productive investments that drive job creation.
What the report is saying
The AFC report shows a significant increase in capital held by African institutions, driven partly by global market dynamics, particularly rising gold prices. However, much of this capital remains underutilised in infrastructure financing.
- Total institutional capital pools in Africa exceeded $2 trillion, up from over $1.6 trillion recorded a year earlier.
- “An update of our database shows institutional capital pools now exceed US$2 trillion, including over US$1 trillion in pension and insurance assets, approximately US$275 billion in public development banks, US$164 billion in sovereign wealth funds, and US$530 billion in central bank reserves – supported,” the report stated.
- The growth in reserves was partly driven by higher gold prices, which boosted the value of central bank holdings.
- “Across the continent, there is growing consensus on the role of domestic savings in financing development,” the report states.
Despite this growth, the report notes that capital is not being effectively deployed into infrastructure and industrial development.
More insights
The AFC emphasised that the core issue lies in how capital is allocated rather than its availability, noting that investment strategies remain overly conservative.
- “Capital is accumulating across Africa, but it is not creating jobs at scale,” said Samaila Zubairu, chief executive of the Lagos-based AFC
- “That is the disconnect we must fix.”
- The report highlighted that funds are largely invested in low-risk assets such as government bonds.
- This approach limits the flow of capital into productive sectors like infrastructure and manufacturing.
The AFC described this as a “failure of alignment” between capital availability and development needs.
What you should know
The report comes amid increasing difficulty for African countries to access external financing due to global economic shocks and geopolitical uncertainties. This makes domestic capital mobilisation more critical than ever.
- Global conditions have made it harder for African nations to raise development finance from international markets.
- The AFC was established in 2007 to mobilise funding for infrastructure and industrialisation across the continent.
- The institution is owned by 48 African countries, alongside the African Development Bank, Turk Exim Bank and private investors.
- Ongoing discussions in Nairobi are aimed at securing deals to close Africa’s infrastructure financing gap.
- Earlier, the AFC said its newly secured ‘A’ long-term credit rating from S&P Global will lower its borrowing costs and strengthen its ability to expand infrastructure financing across Africa.
The report underscores the urgent need to redirect domestic capital toward infrastructure development, as Africa seeks to bridge its funding gap and drive sustainable economic growth.
