When people talk about Africa’s development, the conversation often turns to aid or foreign investment. But what if the money to build Africa’s future is already here, within its borders?
Recent research from the Africa Finance Corporation (AFC) suggests exactly that. The continent is home to over $1.1 trillion in institutional capital from domestic sources like pension funds, insurance companies, sovereign wealth funds, and development banks.
As Africa’s working-age population grows faster than anywhere else in the world, there’s a critical opportunity to channel this local capital into long-term development.
Pension funds are already managing an estimated $455 billion in assets. South Africa leads, accounting for more than $315 billion, about 70% of the continent’s pension capital.
Nigeria, despite a dip in dollar terms due to currency depreciation, now holds over ₦22.8 trillion (around $14.2 billion) in pension assets, with steady growth in local currency.
Pension assets by country
Yet many have questioned whether Africa’s pension funds are being put to their best use. Encouragingly, several countries are pushing forward with reforms to unlock this capital and direct it toward productive sectors like transport, energy, digital infrastructure, and manufacturing.
These efforts include diversifying permissible investments, revising limits that concentrate assets in government securities, and loosening caps to enable more flexible and strategic capital deployment.
Two standout examples are Namibia and Nigeria. Namibia has adopted a regulatory approach, through NAMFISA’s Regulation 29, requiring pension and insurance funds to invest part of their portfolios in local, unlisted companies. Nigeria, on the other hand, uses a market-based strategy.
Its public-private institution InfraCredit offers local currency guarantees to de-risk infrastructure investments, helping pension funds invest in long-term projects without needing strict allocation mandates.
