Unlocking Institutional Capital to Bridge the Infrastructure Gap

Africa stands at a pivotal crossroads. As traditional sources of development assistance decline and global capital flows become more selective, the continent is being pushed to look inward for solutions.

At the African Development Bank Group’s 2025 Annual Meetings held in Abidjan, senior leaders, economists, and financiers gathered to focus on a compelling question: How can Africa mobilise its own institutional capital to finance its future?

The side event, hosted by the AfDB’s Resource Mobilisation and Partnerships Department in collaboration with the Making Finance Work for Africa initiative, put Africa’s financial sovereignty at the centre of the development conversation.

With development assistance dropping by 10% and foreign direct investment (FDI) falling by 12% to just $40 billion (specific timeframe not provided), the urgency is clear. Meanwhile, Africa faces a staggering annual infrastructure funding gap of between $68 billion and $108 billion.

Yet, it continues to attract only 2% of global investment in infrastructure.

“The real question is not whether the capital exists, it does,” said Solomon Quaynor, AfDB Vice-President for Private Sector, Infrastructure and Industrialisation. “The question is how to mobilise it on a large scale for productive, high-impact investments.”

Trillions in Untapped Institutional Wealth

Contrary to persistent global perceptions of a financially fragile continent, Africa is, in fact, sitting on a vast pool of underutilised capital. According to Quaynor, institutional investors across the continent, including pension funds, sovereign wealth funds, insurance companies, and central banks, manage a combined total of more than $2.1 trillion in assets.

“If just 5% of these funds were allocated toward infrastructure and private sector investment,” he noted, “Africa could unlock over $100 billion in long-term capital every year.”

This shift, however, requires more than goodwill. It demands new thinking, risk mitigation strategies, regional cooperation, and smart policies that incentivise local investment.

Local Solutions Already Working

One of the most compelling examples came from InfraCredit Nigeria, a home-grown credit enhancement institution that has helped raise more than $300 million in local currency financing for infrastructure projects.

Its success rests on reducing perceived risks for investors and proving that well-prepared projects in Africa can generate consistent returns.

“The real risk associated with infrastructure assets is often overestimated,” said Chinua Azubike, CEO of InfraCredit.

“In eight years, we have not recorded any losses on a portfolio of more than 20 projects across 12 sectors.”

IV ZEAL VITAMIN

These are the kinds of results that challenge outdated narratives and demonstrate the investability of African infrastructure.

Making Projects Bankable

Yet even with promising models, the continent still grapples with a lack of “bankable” projects, those deemed viable and attractive to investors. That’s where institutions like the International Finance Corporation (IFC) come in. According to Tafara Ethiopis, IFC Vice President for Africa, risk-sharing between governments and the private sector must improve.

“It is essential to calibrate the distribution of risks and benefits properly. That’s what will make more projects bankable and attractive to institutional capital,” Ethiopis said.

Similarly, Boitumelo Mosako, CEO of the Development Bank of Southern Africa, pointed out that robust governance frameworks and professional project preparation are key to improving investor confidence.

“Yes, we need governance and accountability,” she said. “But as Africans, we also need to learn to trust each other.”

The Role of Regulation and Pension Funds

Trust, however, must also be supported by effective regulation and investor protection. Timi Agama, Director General of Nigeria’s Securities and Exchange Commission, emphasised the importance of creating transparent and investor-friendly environments through legal reforms and education.

Another important lever is aligning pension funds with national development strategies. Denis Charles Kouassi, CEO of Côte d’Ivoire’s National Social Security Fund, said, “All the income we generate is reinvested directly into the national economy to finance our services and boost growth.”

This approach ties long-term financial sustainability to development outcomes – a model that could be replicated across the continent.

A Collective Push Forward

The African Development Bank is leading several initiatives to turn these ideas into action. Through instruments like the Capital Markets Development Trust Fund and regional partnerships, the Bank is helping member states and institutions develop the capacity to manage and mobilise local capital effectively.

Quaynor closed the session with a clear call to action:

“The moment calls for vision. It also calls for innovation. And above all, it calls for action. Let us pool our capital, our ideas, and our will to build an Africa where infrastructure becomes a lever for prosperity, not a drag on it.”

Africa’s struggle to bridge its infrastructure gap is not new. But what has changed is the recognition that waiting for external assistance is no longer a viable strategy. The tools, capital, and expertise exist within the continent. The missing links are coordination, political will, and trust.

As the continent faces a rapidly urbanising population, climate challenges, and economic shifts, the ability to finance its own development could mark a turning point. And with over $2 trillion already under African management, the real question becomes: Can the continent unlock its wealth for its own transformation?