How African countries are investing pension assets

Pension funds are already managing an estimated $455 billion in assets. South Africa leads, accounting for more than $315 billion, about 70% of the continent’s pension capital.

• Africa possesses over $1.1 trillion in domestic institutional capital from sources like pension funds and sovereign wealth funds.
• South Africa accounts for $315 billion of Africa's pension capital, with Nigeria's pension assets steadily growing despite currency challenges.
• Reforms in various countries aim to redirect pension funds toward critical sectors such as infrastructure and manufacturing.

When people talk about Africa’s development, the conversation often turns to aid or foreign investment. But what if the money to build Africa’s future is already here, within its borders?

Recent research from the Africa Finance Corporation (AFC) suggests exactly that. The continent is home to over $1.1 trillion in institutional capital from domestic sources like pension funds, insurance companies, sovereign wealth funds, and development banks.

DON'T MISS THIS: Africa holds $4 trillion in domestic capital for infrastructure investment - AFC

As Africa’s working-age population grows faster than anywhere else in the world, there’s a critical opportunity to channel this local capital into long-term development.

Pension funds are already managing an estimated $455 billion in assets. South Africa leads, accounting for more than $315 billion, about 70% of the continent’s pension capital.

Nigeria, despite a dip in dollar terms due to currency depreciation, now holds over ₦22.8 trillion (around $14.2 billion) in pension assets, with steady growth in local currency.

Pension assets by country

Yet many have questioned whether Africa’s pension funds are being put to their best use. Encouragingly, several countries are pushing forward with reforms to unlock this capital and direct it toward productive sectors like transport, energy, digital infrastructure, and manufacturing.

These efforts include diversifying permissible investments, revising limits that concentrate assets in government securities, and loosening caps to enable more flexible and strategic capital deployment.

DON'T MISS THIS: Top 10 African countries making the most progress in infrastructure development

Two standout examples are Namibia and Nigeria. Namibia has adopted a regulatory approach, through NAMFISA’s Regulation 29, requiring pension and insurance funds to invest part of their portfolios in local, unlisted companies. Nigeria, on the other hand, uses a market-based strategy.

Its public-private institution InfraCredit offers local currency guarantees to de-risk infrastructure investments, helping pension funds invest in long-term projects without needing strict allocation mandates.

Read More