Africa Shifts Toward Local Capital to Fund Infrastructure as Debt Limits Bite
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African governments are increasingly exploring alternatives to external borrowing to fund infrastructure, with policymakers pointing to tighter debt constraints and rising currency risks as reasons to mobilise long-term local capital instead.
A public finance expert, Shem Joshua, said the push toward domestic capital mobilisation aims to match long-term infrastructure needs with stable local funding while deepening domestic financial markets.
The infrastructure financing gap is estimated at $68–$108 billion a year, while domestic institutional capital led by pension funds and insurers exceeds $1 trillion, yet less than 5% of those savings are invested in infrastructure or productive assets, according to the Africa Finance Corporation.
South Africa’s debut Infrastructure and Development Finance Bond in November 2025 was cited as a sign of the shift, with the National Treasury raising R11.8 billion and attracting bids above R26 billion, while proceeds were linked to projects approved under the Budget Facility for Infrastructure and disbursed via the Development Bank of Southern Africa’s Infrastructure Fund.
Kenya’s cabinet approved plans in December 2025 for a National Infrastructure Fund and Sovereign Wealth Fund to pool privatisation proceeds and crowd in private and development capital, while Ghana’s fixed-income market rebound was highlighted as part of efforts to rebuild confidence and broaden long-term financing channels.
The report also pointed to Nigeria’s growing pension assets, Morocco’s use of capital markets ahead of 2030 World Cup-related infrastructure, and Egypt’s investor diversification via sukuk, while warning that failure to strengthen regulatory and operational frameworks could undermine investor confidence.
