Mobilizing Africa's $4 trillion in Untapped Domestic Capital

Africa holds an estimated US$4 trillion in untapped domestic capital, yet much of it remains locked in low-yield assets rather than fueling transformative investments—what the United Bank for Africa (UBA) describes as a “systematic misallocation” of financial resources.

According to UBA, 85% of domestic financial assets are tied up in sovereign borrowing and short-term government securities rather than being deployed toward productive, growth-oriented investments.

The funds—comprising commercial bank assets, pension and insurance reserves, national savings, and remittances—represent an immense opportunity to finance infrastructure, SMEs, and the green economy.

Although Africa attracted about $97 billion in foreign direct investment in 2024, its banking sector accounts for just 3% of global banking assets, highlighting a persistent disconnect between available resources and real economic deployment.

Redirecting even a fraction of this domestic capital toward strategic investment could transform the continent’s economic trajectory. The priority is not merely “building roads to the sea,” but developing railways, data networks, and digital trade infrastructure that connect African economies and accelerate implementation of the African Continental Free Trade Area.

This shift calls for an African-led financial architecture that mobilizes domestic resources and fosters collaboration between banks, fintechs, and development institutions. Blended finance, digital banking, and innovative credit solutions are critical tools for unlocking capital trapped in low-yield assets.

With global aid flows declining and debt pressures mounting, Africa’s next phase of growth must be financed by Africans, for Africans—leveraging local ingenuity and modern financial instruments to drive long-term development.

Yet, realizing this vision requires addressing deep structural barriers, including policy uncertainty, fragmented regulation, and limited investment vehicles. Strengthening governance, expanding local bond markets, and aligning pension and insurance fund mandates with infrastructure and SME financing will be crucial.