The Africa Finance Corporation (AFC) has spotlighted Nigeria as a leading example of how market-driven de-risking strategies can successfully mobilise pension funds for infrastructure development—without relying on rigid regulatory mandates. This insight was featured in the AFC’s 2025 State of Africa’s Infrastructure Report, titled “Mobilising Domestic Capital.”
The report makes a compelling case for leveraging Africa’s substantial domestic capital—estimated at over $4 trillion—to finance long-term infrastructure projects and catalyse industrial growth. This pool includes around $1.1 trillion in institutional capital, $2.5 trillion in commercial banking assets, and over $470 billion in external reserves.
Despite recent signs of progress, the report notes that infrastructure investment across the continent remains hampered by significant credit and liquidity risks. A key challenge lies in the lack of regulatory clarity and suitable financial instruments in many African countries, which has stalled the effective redirection of domestic capital into development-focused sectors.
“Pension funds and insurance companies, which collectively manage over $777 billion in assets, represent a significant yet underutilised source of long-term development finance in Africa,” the AFC stated.
However, countries like Nigeria, South Africa, and Kenya are beginning to align domestic savings with national development goals. Nigeria, in particular, stands out with one of the continent’s largest institutional capital pools. As of early 2025, pension assets under management (AUM) in Nigeria reached N22.8 trillion—approximately $14.2 billion.
Thanks to credit enhancement mechanisms such as InfraCredit, Nigeria has seen notable growth in infrastructure allocation. Pension investments in infrastructure rose from a mere N1.2 billion (0.02% of AUM) to over N242 billion (1% of AUM), amounting to roughly $155 million.
Speaking at the report’s launch, AFC President and CEO Samaila Zubairu emphasised the urgency for African nations to take charge of their development trajectories. He called for stronger domestic credibility and institutional frameworks to position African countries as viable and attractive investment destinations.
