"Africa Holds $4 Trillion in Domestic Capital For Infrastructure Investment"

" Africa Holds $4 Trillion in Domestic Capital For Infrastructure Investment \r\n\r\n \r\n\r\nThe Africa Finance Corporation has said African governments should look inward to tap into an estimated $4 trillion in capital held by domestic institutional investors.\r\n\r\n \r\n \r\n\r\nAccording to the AFC, around $455 billion of this capital is currently held in pension funds, while sovereign wealth funds account for another $150 billion.\r\n\r\n \r\n \r\n\r\nWhen combined with commercial bank assets and foreign currency reserves, the total pool of investable domestic capital across the continent reaches $4 trillion.\r\n \r\n\r\nWith the continent\u2019s population and economies rapidly expanding, investments in sectors like railways and power generation are becoming increasingly urgent.\r\n\r\n \r\n \r\n\r\nHowever, traditional funding avenues, such as foreign direct investment and official development assistance, are no longer keeping pace with the continent's infrastructure needs,\u00a0 Reuters \u00a0reported.\r\n\r\n \r\n \r\n\r\nAfrican governments are finding it increasingly difficult to allocate funds for development projects, as interest payments consume a growing portion of national budgets.\r\n\r\n \r\n \r\n\r\nShrinking donor budgets, and rising protectionist policies in advanced economies are further constraining the flow of funds, the AFC noted in its report.\r\n \r\n Legal and regulatory hurdles remain \r\n\r\n \r\n \r\n\r\nAccording to the report, much of this domestic capital is currently held by institutions or parked in short-term, liquid assets like money markets, largely due to legal restrictions on how pension funds can be invested.\r\n\r\n \r\n \r\n\r\nMost African nations lack the regulatory clarity and financial instruments needed to redirect capital flows, the AFC said, adding that the vacuum is one of the biggest barriers to mobilizing domestic capital at scale.\r\n\r\n \r\n \r\n\r\nSouth Africa, Nigeria and Kenya are among a small group that have begun to align savings with development needs, the lender said. Still, progress is slow. Nigeria\u2019s pension exposure to infrastructure has grown from less than 0.02% to 1% of total assets since 2017.\r\n\r\n \r\n \r\n \r\n \r\n\r\nTo unlock these funds, African governments will need to modernize large informal sectors of their economies that remain untaxed and unregulated, and reform pension fund regulations to enable long-term infrastructure investment, the AFC said.\r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n "

"Africa Holds $4 Trillion in Domestic Capital For Infrastructure Investment"

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