Africa’s institutional capital pool rose sharply to more than $2trn in 2025, but the continent continues to struggle to channel these funds into critical infrastructure and industrial development, according to a new report by the Africa Finance Corporation (AFC).
The findings, published in the AFC’s latest State of Africa’s Infrastructure Report released in Nairobi, highlight a widening disconnect between the rapid growth in financial assets held by African institutions and their limited deployment into productive sectors capable of driving economic growth and job creation.
According to the report, Africa’s total institutional capital pools expanded by 25 per cent from approximately $1.6trn in 2024 to over $2trn in 2025.
The assets are spread across a broad range of institutions, including more than $1trn in pension and insurance funds, about $275bn in public development banks, $164bn in sovereign wealth funds, and roughly $530bn in central bank reserves.
The growth in capital reserves was partly attributed to favourable global market conditions, particularly rising gold prices, which boosted the value of central bank holdings across the continent. The report noted that this trend has strengthened the case for leveraging domestic savings as a key source of development finance.
Despite this progress, the AFC stressed that the availability of capital is not the primary constraint. Instead, the challenge lies in how these resources are allocated.
A significant portion of institutional funds continues to be invested in low-risk instruments such as government bonds, limiting the flow of capital into infrastructure, manufacturing, and other productive sectors.
“Capital is accumulating across Africa, but it is not creating jobs at scale. That is the disconnect we must fix,” said Chief Executive Officer of the AFC, Samaila Zubairu.
The report described the situation as a “failure of alignment” between capital availability and development priorities, warning that conservative investment strategies are constraining economic transformation.
It added that without deliberate policy and regulatory reforms to incentivise long-term investments, Africa risks missing an opportunity to leverage its growing financial base to close its infrastructure gap.
Infrastructure deficits remain a major bottleneck to growth across the continent, affecting sectors such as energy, transport, and industrial production. Analysts estimate that Africa requires tens of billions of dollars annually to meet its infrastructure needs, yet funding shortfalls persist despite rising domestic capital.
The AFC called for stronger frameworks to mobilise institutional investors, deepen capital markets, and create bankable projects that can attract long-term financing. It also emphasised the importance of aligning investment strategies with national development goals to ensure that accumulated capital translates into tangible economic outcomes.
