— A Deep Dive into the Africa Finance Corporation’s 2025 State of Infrastructure Report
In its State of Africa’s Infrastructure Report 2025, the Africa Finance Corporation (AFC) delivers a powerful message that signals a paradigm shift in how Africa must finance its future. For decades, the continent’s development story has been marked by an external financing dependency — donor aid, concessional loans, and multilateral funding. But now, the AFC argues, that model is no longer sustainable. Nor is it necessary.
The capital is here. It simply needs to be unlocked.
The Domestic Wealth Hidden in Plain Sight
Africa currently holds $4.1 trillion in domestic capital stock — a staggering figure that dismantles the myth of a cash-poor continent. The numbers speak volumes:
✍🏾$455 billion in pension assets
✍🏾$320 billion in insurance pools
✍🏾$250 billion under 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
Collectively, these pools of capital represent immense potential to finance Africa’s infrastructure ambitions from within. However, the report makes it clear that this wealth is currently underutilised, trapped in low-yield or inaccessible vehicles, and limited by institutional weaknesses and regulatory inertia.
What’s Holding Africa Back?
Despite the impressive numbers, African infrastructure continues to suffer from underinvestment and poor project delivery. According to the AFC, several interlocking challenges are at play:
🔹 High Informality
With over 80% of employment in the informal sector, large swaths of the population remain outside formal financial systems. This restricts savings mobilisation and long-term investment participation.
🔹 Asset Misallocation
Pension and insurance funds are overexposed to sovereign debt, often due to regulatory constraints and risk aversion. This misallocation crowds out productive infrastructure investments.
🔹 Weak Capital Markets
African capital markets remain fragmented and shallow, unable to generate robust pipelines of investable infrastructure projects or efficiently mobilise long-term capital.
🔹 Underpowered Public Development Banks (PDB)
Although Africa accounts for 20% of global public development banks, it holds only 1.9% of global PDB assets. This discrepancy underscores the continent’s institutional undercapitalisation.
The Road Ahead: Structural Solutions, Not Band-Aids
AFC’s report doesn’t merely diagnose the problem — it proposes a bold new approach rooted in African sovereignty, institutional innovation, and strategic convergence.
🔧 Unlocking Pension and Insurance Capital
Through regulatory reform and credit guarantees, long-term institutional capital can be redirected toward infrastructure. Examples such as Namibia’s Regulation 29 demonstrate how local investment quotas can channel pension assets into domestic development.
🔧 Reorienting Development Institutions
Public Development Banks must be recapitalised and given stronger mandates aligned with national priorities. Sovereign wealth funds, similarly, must pivot away from passive offshore investments and toward local economic transformation.
🔧 Capital Market Integration
The scaling of platforms such as the African Exchanges Linkage Project (AELP) and the African Securities Exchanges Association (ASEA) can bring regional coherence to African capital markets, increasing liquidity and cross-border investment flows.
🔧 Digital Public Infrastructure (DPI)
Digital platforms can formalise savings and aggregate micro-capital, turning fragmented household income into investable assets. Kenya’s micro-pension schemes via M-Pesa and Nigeria’s InfraCredit are prime examples of digital infrastructure unlocking real-world capital.
Strategic Convergence: A Moment for Institutional Alignment
Crucially, this new agenda is not operating in a vacuum. It aligns with broader pan-African development efforts. The African Development Bank (AfDB), for instance, is not only an equity stakeholder in the AFC but also co-finances landmark infrastructure corridors such as Lobito.
This AfDB–AFC partnership represents a new model of intra-African cooperation — where financial innovation (AFC) and institutional depth (AfDB) are brought together to deliver on-the-ground impact. The coordination of sovereign-led initiatives can provide both the scale and legitimacy needed to anchor long-term infrastructure programmes.
Africa’s Financial Sovereignty: A Historic Imperative
The real message of the AFC report is that Africa no longer lacks capital — it lacks pathways. With nearly $100 billion flowing in annually through remittances alone, and trillions sitting in underperforming accounts, the question is no longer whether the money exists. The question is how to mobilise, intermediate, and deploy it for generational impact.
This calls for nothing short of a financial architecture revolution — one led by Africans, for Africans. It means embracing innovation while also reforming institutions. It requires regulatory courage and the political will to prioritise long-term value over short-term expedience.
Africa stands on the cusp of its own infrastructure renaissance, not because of foreign aid, but because of the untapped wealth of its people and institutions. If that wealth is structured properly, it can build not just roads, ports, and energy grids — but also the foundation for economic sovereignty, resilience, and dignity.
The Future is African-Financed
Africa’s infrastructure gap — long a barrier to prosperity — is now also a mirror. It reflects a deeper challenge: aligning domestic wealth with continental ambition. The AFC’s 2025 report makes one thing clear: external finance may have kickstarted Africa’s development, but it will not finish the job.
The future of African infrastructure must be African-financed, African-owned, and African-led.
The capital is already here. The time to mobilise it is now.
