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Africa’s burgeoning pool of pension and insurance assets estimated at a staggering $777 billion holds untapped potential to drive the continent’s infrastructure and economic transformation, according to the Africa Finance Corporation (AFC). In a recent strategic briefing, the pan-African multilateral development finance institution urged policy makers and financial sector leaders to harness these domestic savings to reduce reliance on external debt and foreign aid.
Unlocking Domestic Capital for Development
Speaking at a high-level forum in Lagos, AFC President and CEO Samaila Zubairu emphasized that mobilizing long-term domestic capital from pension funds and insurance schemes could provide a sustainable pathway to bridge Africa’s massive infrastructure financing gap, currently estimated by the African Development Bank to exceed $100 billion annually.
“Rather than continuing the cycle of borrowing externally at high costs and unfavorable terms, Africa must begin looking inward. The continent’s pension and insurance sectors are sitting on nearly $800 billion in assets capital that could be redirected towards long-term investments like roads, energy, railways, healthcare, and digital infrastructure,” said Zubairu.
He noted that with rising debt burdens and tightening global financing conditions, African nations must rethink traditional financing models and develop mechanisms to align local savings with national development priorities.
The Investment Gap and Opportunity
Africa continues to face acute deficits in transport, energy, water, and digital infrastructure. Despite robust economic potential fueled by a young population, urbanization, and a growing middle class the lack of sustainable funding models has constrained growth.
Zubairu explained that pension and insurance funds, which typically seek long-term, stable returns, are ideal investors in infrastructure projects, which also tend to be long-term in nature. However, only a fraction of these domestic assets are currently invested in development-focused projects on the continent.
“There’s an institutional mismatch. While the capital exists, regulatory barriers, limited financial instruments, and perceived risk prevent domestic institutional investors from allocating capital to transformative infrastructure,” he said.
Addressing Risk and Regulatory Challenges
The AFC is calling for reforms to address structural and regulatory barriers that hinder greater participation of domestic institutional investors. These include overly conservative investment guidelines, lack of project preparation capacity, and insufficient credit enhancement tools.
The Corporation has already launched innovative instruments, including infrastructure bonds, blended finance vehicles, and de-risking facilities to attract more local investment. It also champions credit rating improvements, financial market deepening, and policy harmonization across countries.
Additionally, AFC is working with regulators to expand the investment mandates of pension and insurance funds, enabling them to invest a greater portion of their portfolios in infrastructure, green energy, and other productive sectors.
Regional Collaboration Is Key
AFC emphasized the need for regional cooperation and coordination to create investable pipelines of cross-border infrastructure projects. Joint planning, pooled funds, and standardized regulatory frameworks can help overcome fragmentation in African capital markets and unlock economies of scale.
Countries like South Africa, Nigeria, Kenya, and Morocco, which host large pension and insurance markets, could play a catalytic role in piloting new financing models that can later be replicated across the continent.
Toward a New Development Paradigm
The appeal to tap domestic pension and insurance funds comes amid growing scrutiny of Africa’s reliance on foreign debt, particularly from Eurobond markets and multilateral institutions. Many African countries now face ballooning debt servicing costs, currency depreciation, and rising fiscal stress.
Zubairu stated: “By investing in our own future, we reduce dependency, increase ownership, and build resilience. Africa’s future lies in unlocking African capital for African development.”
Outlook
With over $777 billion in pension and insurance assets across the continent an amount projected to grow significantly in the coming decade Africa has an unprecedented opportunity to finance its own development.
Realizing this potential, however, will require bold reforms, institutional innovation, improved risk-sharing mechanisms, and strong political will.
As the AFC continues to mobilize private and public capital for Africa’s infrastructure needs, its message is clear: Africa holds the financial resources to drive its growth if it can connect capital with purpose.
