Africa is entering a new phase in its development journey, with domestic capital emerging as a potential driver of infrastructure growth. The State of Africa's Infrastructure Report 2026 by the Africa Finance Corporation highlights that while external aid to Africa fell by 23.1% in 2025, the continent holds domestic capital pools exceeding $4 trillion. However, the challenge lies in turning this financial resource into productive investment without placing additional pressure on public finances.
Mobilising capital is only part of the equation; ensuring it reaches viable infrastructure projects is equally important. Africa's pension industry, valued at approximately $420 billion, illustrates this challenge. Infrastructure investment remains below 10% in many markets, while government bonds account for around 60-70% of pension fund portfolios in several countries, reaching 90% in Ghana and 60% in Nigeria.
Brookings offers a more cautious perspective on the continent's domestic capital, noting that much of the headline $4 trillion is already committed to essential financial obligations. After accounting for these constraints, approximately $300 billion may be realistically available for reallocation. Unlocking it would require deliberate policy choices, particularly where pension funds currently finance public budgets through government securities.
Across the continent, governments and financial institutions are exploring ways to direct domestic savings towards infrastructure. In Kenya, the Central Bank launched a KSh150 billion infrastructure bond sale in August 2026, offering tax-free yields of 11.75% to 12.74% across 16-, 18- and 21-year tenors. This move aims to channel domestic savings into infrastructure development.
Rwanda is also demonstrating the potential of domestic capital markets. The Development Bank of Rwanda's third Sustainability-Linked Bond achieved a 126.2% subscription rate, raising more than Frw 29 billion against an initial target of Frw 23 billion. This success reflects growing investor confidence in the country's capital market and its ability to mobilise long-term development finance.
Blended finance is another emerging tool for mobilising domestic capital. In August 2026, AFC Capital Partners launched the Infrastructure Climate-Resilient Fund Nigeria, targeting pension funds, insurers and asset managers. The fund forms part of a $750 million pan-African vehicle backed by a $253 million first-loss commitment from the Green Climate Fund.
Despite these developments, a shortage of bankable projects remains a major obstacle. To address this, Nigeria's Federal Government signed a cooperation agreement with the International Finance Corporation to strengthen project preparation and accelerate infrastructure delivery. The IFC has mobilised approximately $20 billion in Nigeria across energy, digital infrastructure and other sectors over the past five years.
Key points
- Domestic capital pools in Africa exceed $4 trillion.
- Africa's pension industry is valued at approximately $420 billion.
- A shortage of bankable projects remains a major obstacle to infrastructure development.
