Africa Has USD 700 Billion in Pension Capital. Why Is So Little Reaching Infrastructure?

From left: (Oyebanji “Banji” Fehintola, CFA – Executive Board Member & Head, Financial Services, Africa Finance Corporation) - (Marshall Bailey, OBE, CFA – Chairman, Board of Governors, CFA Institute) - (Abubakar Hassan Abubakar – Principal Secretary, State Department for Investment Promotion, Ministry of Investment, Trade and Industry) - (Francis Nasyomba, CFA – President, CFA Society East Africa), during the official opening of the Africa Investment Conference 2025 in Nairobi, Kenya.

Africa has adequate capital. The problem is getting it to work for African infrastructure, businesses, and long term development. There is more than USD 700 billion of pension funding across the continent, yet almost 80 percent of that sits in financial assets such as government bonds instead of flowing into projects and enterprises that need patient capital.

At the Africa Investment Conference 2025 in Nairobi, Francis Nasyomba, CFA, Founder of Capital Connect, CEO of Raisin Capital, and President of CFA Society East Africa, set out the core challenge: Africa has money, but the systems to move it into long term investments are weak. Banji Fehintola, CFA, from Africa Finance Corporation (AFC), showed how this plays out in bond markets and why the Africa risk premium is so costly.

Why African pension capital stays in bonds

Africa has more than 50 countries. For any investor who wants to invest across African borders, that means dealing with more than 50 different policies and regulations. That fragmentation is one of the biggest bottlenecks because it multiplies approvals, due diligence, and uncertainty for every cross border deal.

A second bottleneck is that there are not enough investment ready, investment grade opportunities. It is not enough to talk about investments in general. Opportunities have to be made investment ready, structured properly, and made available for pension funds and other institutional investors. That includes preparing projects so they can actually be invested in, not just discussed at conferences.

To make projects bankable, any investor is looking for a return that is risk adjusted. It is about risk and liquidity together. Pension funds have responsibilities to their account holders and must be able to pay out liabilities when they fall due. That means projects must have adequate liquidity and must make economic and commercial sense, with returns that feel commensurate with the risk taken.

How the Africa risk premium hurts issuers

Banji Fehintola, CFA described how this shows up when raising money. While arranging bonds for AFC, rated A3 by Moody’s, he would compare AFC’s pricing with other A3 names around the world. Each time, AFC’s spreads were at least 100 basis points higher, sometimes more, even compared to lower rated issuers in other regions.

A study he cited shows that African issuers pay up to USD 70 billion in excess interest because of this so called Africa risk premium. That is a huge extra cost for the continent and reduces what can be invested back into development.

At one point, Banji Fehintola, CFA and colleagues went to the World Bank to raise this directly with President Ajay Banga. They went in complaining about the Africa risk premium. After the formal exchanges, he suggested they “talk like friends” and asked outright: is there a reason why there should be an Africa risk premium?

By coincidence, that same week Aliko Dangote was facing deep issues with his refinery in Nigeria, dealing with all sorts of battles. The question was simple: if someone like Dangote can struggle this much, what chance do smaller players have? That reality was called the African mystery. It is part of the premium the continent is paying and shows that some of the risk is perception, while some is rooted in real policy and legal challenges.

Regional scale and industrial zones in Africa

The conversation then turned to what can be done to make infrastructure a real, investable asset class.

One element is scale. If every country does its own small project, ticket sizes and liquidity will never be attractive enough for large investors. Thinking regional changes that. A regional infrastructure play, like the corridor described on stage, creates a pipe big enough for global and domestic investors to participate in meaningfully.

A practical example was a special economic zone platform that started in Gabon, focused on industrialization and adding value in the forest industry. It then expanded to Benin, where the focus is on cotton, and today T shirts and clothes from that zone are sold in North America. In Chad, the work is around livestock. From a single country, the company is now present in 11 countries, building real regional scale.

That regional growth also created value. AFC invested when the company was valued at about USD 1 billion. A later partial exit was done at a valuation of about USD 1.8 billion, almost USD 2 billion, for roughly USD 300 million of equity. This shows that when projects are structured well and grown across borders, they can deliver both development impact and strong financial outcomes.

Guarantees and local currency infrastructure finance

The other major tool discussed was the use of guarantees, especially in local currency, to bring pension funds into infrastructure.

A guarantee company was created in Nigeria in 2017 and 2018, rated AAA on the domestic scale. On the back of its guarantees, Nigerian pension funds are now investing in infrastructure bonds with maturities of up to 20 years. They are moving away from traditional treasuries and starting to take more risk because those guarantees address core concerns about default and liquidity.

The structure behind that company involves AFC, GuarantCo in the UK, NSIA in Nigeria, and InfraCo Africa. The design is simple: provide strong guarantees so cautious, long term domestic investors can accept infrastructure bonds as part of their portfolios.

A similar vehicle is now being created in Kenya, called Dhamana. Dhamana has started operations and is being capitalized to provide guarantees for local currency financing into infrastructure. The idea is the same: crowd in domestic capital by de risking local currency instruments so that long term investors can participate without taking on unacceptable risk.

Turning AfIC 2025 conversations into action

This is the second time this conference has been held. The clear intention is that it must be more about actions than talk.

The plan is focused. There will be two to three maximum action points. Each action point will be allocated to specific individuals and institutions, with clear responsibility. There is an intention to hold biannual follow ups every six months on progress so that by the time everyone comes back, there is real movement, not just repeated conversations.

Francis Nasyomba, CFA stressed that government participation is increasing. Even though not everyone was in the room, conversations are starting from the governmental side, and supra governmental involvement is expected to grow over time. Government is keen on looking at private sector participation and on pushing investments coming from the private sector side. This moment is seen as an opportunity to start the conversation and push it forward, with confidence that others will join as momentum builds.

The session closed with thanks to Francis Nasyomba, CFA, Banji Fehintola, CFA, Odan, Vinod, and the AfIC secretariat, with a clear expectation that the points raised on stage will be turned into trackable action items, not just words.

What this means for practitioners

For African pension funds, investment managers, and policymakers, the message from Francis Nasyomba, CFA and Banji Fehintola, CFA is direct: Africa does not need to wait for new money. The task is to mobilise existing African pension capital into bankable, de risked, regional infrastructure and industrial projects, supported by clear policies, credible guarantees, and a disciplined shift from talk to action.