• AFC identifies $4 trillion in African funds that could finance infrastructure
• Most assets sit in low-yield, short-term investments outside the continent
• Reforming financial systems and markets seen as key to unlocking capital

Africa has over $4 trillion in domestic capital that could be mobilized for infrastructure development, according to the Africa Finance Corporation (AFC). The main challenge is not the lack of funds, but the mechanisms needed to redirect them to suitable projects.

The finding comes from the AFC’s State of Infrastructure in Africa 2025 (SIA 2025) report, released on June 5, 2025. The report highlights that much of this capital is held by African financial institutions, pension funds, insurance firms, sovereign wealth funds, development banks, commercial banks, and foreign exchange reserves.

However, a large portion of these resources remains invested in short-term, low-yield assets, often outside Africa. The AFC notes this misallocation hinders infrastructure financing, despite the abundance of available capital.

From the total $4 trillion, about $1.6 trillion is held in the non-banking sector. Pension and retirement funds represent over $455 billion, insurance firms hold $320 billion, public development banks $250 billion, and sovereign wealth funds $150 billion. African foreign currency reserves add $473 billion.

The banking sector holds roughly $2.5 trillion in assets, which the AFC describes as significantly underutilized. Structural reforms and greater coordination could unlock these funds for infrastructure and industrial transformation.

African institutional investors, including pension and insurance funds, manage about $777 billion in assets. These long-term, or "patient," funds are well-suited to infrastructure development. Yet only a small share supports the real economy, due to restrictive regulations, lack of adapted investment tools, and high perceived risk.

Public development banks and sovereign wealth funds, managing a combined $400 billion, often face limited mandates and weak alignment with national strategies. Diaspora remittances, which exceeded $95 billion in 2024, also remain largely untapped as a development financing tool.

The AFC emphasizes the need to strengthen financial institutions and develop more integrated regional capital markets. Expanding investment vehicles that can channel long-term savings into infrastructure is also critical.

Initiatives such as the African Securities Exchanges Association (ASEA) and the African Exchanges Linkage Project (AELP) could promote cross-border listings and improve liquidity. Boosting financial inclusion would also expand formal capital pools by integrating informal sector participants, who represent 80% of employment and 40% of GDP in many African economies.