African countries are failing to channel a growing pool of domestic capital into large-scale infrastructure projects, despite a sharp rise in institutional assets, according to a report by the Africa Finance Corporation (AFC).
The continent’s financial institutions saw their capital holdings jump by about 25 percent in 2025 to more than US$2 trillion, driven in part by record gold prices, the AFC said in its latest “State of Africa’s Infrastructure Report.”
Yet the increase has not translated into sufficient investment in critical sectors such as transport, energy and logistics, which are essential for economic growth and job creation.
“Capital is accumulating across Africa, but it is not creating jobs at scale,” AFC chief executive Samaila Zubairu said at the report’s launch in Nairobi.
He attributed the gap to what he described as a “failure of alignment,” with funds heavily concentrated in low-risk assets such as government bonds rather than being deployed into productive investments.
More Read
The findings come at a time when African governments face mounting constraints in accessing external financing. Rising global interest rates, geopolitical tensions and high debt burdens have made it more difficult and expensive to borrow on international markets.
As a result, policymakers are increasingly being urged to tap domestic capital pools, including pension funds, sovereign wealth funds and central bank reserves, to finance development.
However, the AFC report suggests that structural and regulatory barriers continue to limit the flow of these resources into infrastructure projects.
The lack of investment has significant implications for regional integration and economic transformation. Poor infrastructure remains a major bottleneck to trade, raising costs for businesses and limiting the movement of goods and people across borders.
It also hampers efforts to fully realise the potential of initiatives such as the African Continental Free Trade Area, which aims to boost intra-African trade.
The report highlights that a substantial portion of the increase in institutional capital came from central bank reserves, boosted by rising gold holdings as global prices surged. While this has strengthened balance sheets, it has not directly translated into development financing.
The African Development Bank and other partners have repeatedly stressed the need for innovative financing mechanisms to bridge Africa’s infrastructure gap, estimated at tens of billions of dollars annually.
The AFC, founded in 2007 and backed by dozens of African states, was established to help mobilise capital for infrastructure and industrial projects across the continent.
Its latest report was released at the start of a two-day meeting in Nairobi aimed at advancing deals and partnerships to accelerate project financing.
Analysts say unlocking domestic capital will require reforms to deepen financial markets, reduce investment risks and create pipelines of bankable projects that can attract institutional investors.
Without such changes, Africa risks missing an opportunity to leverage its growing financial resources to drive long-term development and economic resilience, even as external funding becomes more constrained.
