President William Ruto has stated that Africa's problem is not a lack of capital, but rather restrictive rules that hinder the investment of available funds in productive projects across the continent. He made these remarks at the Africa We Build High-Level Roundtable on the sidelines of the 81st United Nations General Assembly in New York. Ruto emphasized that Africa has more than $2 trillion in domestic non-bank capital pools, including over $1 trillion held in pension and insurance assets.
Ruto questioned why African pension funds continue to invest heavily outside the continent while critical infrastructure projects at home struggle to attract long-term financing. He cited the example of African pension funds preferring US Treasuries over African power plants. The President also highlighted the high cost of insurance for productive assets on the continent, saying it can make viable projects difficult to finance. He argued that African countries face risk premiums that may not accurately reflect their actual default and recovery records.
The President called for African risk to be priced using African data, arguing that better risk assessment could reduce the cost of capital on the continent. Ruto cited a UNDP estimate that more objective credit ratings could save African countries up to $74.5 billion. He also called for reforms to prudential and liquidity rules that he said penalize long-term investment. Ruto emphasized that regulatory rules should not treat a 30-year African investment as an exotic asset simply because of its long-term nature.
Ruto said Africa must also strengthen the financial infrastructure needed to turn available capital into actual investments. This includes bankable project pipelines, credit enhancement mechanisms, and local-currency financing instruments. He noted that Kenya's pension industry has assets worth about Sh3.2 trillion, with 46 percent invested in government securities and only 0.02 percent in infrastructure debt. Ruto highlighted the imbalance in investments, saying that for every shilling invested in infrastructure debt, nearly Sh2,000 is invested in government paper.
The President gave the example of a teacher in Eldoret whose pension contributions could ultimately finance Treasury bills rather than a geothermal plant located closer to home. He said Kenya was willing to serve as a test case for reforms aimed at changing how African risk is assessed. Ruto stated that the country was prepared to open its default and recovery data and make pension and insurance regulators available to rating agencies, insurers, and international standard-setting bodies.
Ruto cited several recent measures by Kenya to mobilize private and institutional capital for infrastructure. He mentioned the National Infrastructure Fund, signed into law in March, which is designed to mobilize up to $40 billion for roads, ports, power, and water projects through equity rather than additional public debt. The President also cited the listing of Kenya's first infrastructure fund on the Nairobi Securities Exchange, which raised Sh3.4 billion with support from the United Kingdom.
Ruto proposed the creation of a working group based in Nairobi to examine the barriers to financing African infrastructure and report its findings at the next Africa We Build Summit. The working group, he said, should produce quantified findings within 12 months. The President emphasized that Africa must urgently address its financing constraints as the continent prepares to build the infrastructure needed to support a population projected to approach 2.5 billion by 2050.
Key points
- President Ruto calls for reforms to financial and regulatory systems to unlock available capital for investment in Africa.
- Africa has over $2 trillion in domestic non-bank capital pools, including pension and insurance assets.
- Ruto proposes creation of a working group to examine barriers to financing African infrastructure.
