Africa’s $4.1 Trillion Opportunity: AFC Infrastructure Report Urges Shift from Aid to Domestic Investment

The Africa Finance Corporation’s State of Africa’s Infrastructure Report 2025 makes a decisive claim: Africa no longer needs to look outward for infrastructure finance. With over $4.1 trillion in domestic capital stock—including pensions, insurance reserves, public banks, and remittances—the continent has the financial firepower it needs. The challenge lies in mobilisation and intermediation.

The report highlights key figures illustrating Africa’s underutilised financial potential:

• $455 billion in pension assets
• $320 billion in insurance pools
• $250 billion with public development banks (PDBs)
• $150 billion in sovereign wealth funds (SWFs)
• $2.5 trillion in commercial banking assets
• $95 billion in annual remittances
• $473 billion in foreign reserves, including $38 billion in gold

Yet, much of this capital remains trapped in short-term, low-yield government securities or inaccessible due to informality and shallow capital markets.

“Africa does not lack money. It lacks structured pathways to deploy it at scale,” the report asserts.

What’s holding Africa back?
The report points to five structural hurdles:

• Informality: With over 80% of Africa’s workforce employed informally, savings remain outside formal channels.
• Asset concentration: Pension and insurance funds are overly invested in sovereign debt, limiting long-term project finance.
• Weak PDBs: African PDBs hold just 1.9% of global PDB assets, despite making up 20% of the institutions.
• Fragmented markets: Shallow, fragmented capital markets limit domestic investment pipelines.
• Undeveloped intermediation platforms: There is limited use of credit guarantees or risk-sharing to crowd in private capital.

What must be done?
The AFC outlines a reformist agenda built on five pillars:

1. Regulatory reform to enable pension funds to invest in infrastructure, supported by credit enhancement tools like Nigeria’s InfraCredit.
2. Reorientation of SWFs toward long-term development goals and strategic national infrastructure.
3. Strengthening public development banks, enabling them to play a catalytic role in crowding in private finance.
4. Scaling regional capital markets via platforms such as the African Exchanges Linkage Project (AELP) and the African Securities Exchanges Association (ASEA).
5. Leveraging digital public infrastructure (DPI) to formalise savings and aggregate micro-capital from informal sectors—learning from Kenya’s mobile micro-pension schemes and Namibia’s Regulation 29.

Strategic Convergence
The report emphasises the growing alignment between AFC and the African Development Bank (AfDB). With equity investments, co-financing of economic corridors such as Lobito, and shared priorities in market development, the AfDB–AFC collaboration presents a ready platform for unlocking domestic capital at scale.

Africa’s infrastructure transformation will not be financed by foreign aid—it will be led by African institutions and capital. As the report concludes, “It’s time to move from aid to agency.