Tapping Trillions: Africa's Domestic Capital Solution

African countries are urged to utilize $4 trillion from domestic institutions like pension funds to develop infrastructure. As external funding dwindles due to higher global interest rates and shrinking donor budgets, internal financial reforms could unlock these resources for long-term projects, addressing the continent's infrastructure needs.

African nations may have found a way to bridge their infrastructure funding gap by leveraging an estimated $4 trillion in domestic capital, according to the Africa Finance Corporation (AFC).

With traditional funding sources like foreign investment drying up due to global economic challenges, governments are turning inwards to resources held by institutions such as pension and sovereign wealth funds. The AFC highlights that reforms in investment rules and boosting national savings are crucial steps for unlocking domestic capital aimed at long-term infrastructure projects.

The pressing need for modernized infrastructure on the continent comes as African nations face competition for limited global funding. The African Development Bank's estimates underscore a financing gap of over $400 billion annually, urging a pivot towards self-reliance by reforming and tapping into local financial resources.

(With inputs from agencies.)