Mobilising domestic savings offers governments an alternative to volatile foreign borrowing and moves the continent closer to financial sovereignty. (Photo: ISS) 
African policymakers and investors are coalescing around a pragmatic strategy of mobilising domestic savings, modernising governance and using fund-of-funds structures to channel capital into infrastructure, manufacturing and productive sectors.
The shift comes as Africa’s 2025 economic indicators show steady growth but persistent structural strain.
Regional GDP is expected to expand by roughly 4% over the next year, the African Development Bank states, outpacing the global average but still miles short of generating the 25 million annual wage-paying jobs the World Bank estimates the continent needs. Demographics, rising borrowing costs and geopolitical flux are tightening the margins for error.
John McDermott, chief Africa correspondent at The Economist, told delegates at the private equity and venture capital conference SuperReturn Africa, that leaders are acknowledging the end of passive reliance on Western partners.
He said there was “a widespread agreement that Africa no longer outsources its own government needs to be open to the world. It also needs to sort out its own problems, investing locally and modernising on its own terms. It’s what you might call a vibe shift.”
He described this moment as “two Magas”: Trump-era protectionism on one side, and on the other, an African desire to “Make Africa Great At Last”.
Read more: How South Africa can Make America Great Again
A slow awakening
Despite improving sentiment, African capital markets remain shallow and fragmented. They still only account for about 1% of global equity market capitalisation, and pension funds lean heavily on government debt.
Ghana and Namibia have introduced minimum local-investment rules, but Eva Abel, chief investment officer at Oryx Impact, cautions that regulation alone cannot fix the scars of early losses.
“Pension funds do not necessarily need to have the highest returns in the world. The sad truth of the early pioneers across pension funds in Africa, investing into alternative asset classes, is that they’ve lost money,” she says. Trustees are therefore cautious.
Read more: Pensions gone rogue — is your money being invested responsibly?
Bame Pule, founder of Africa Lighthouse Capital, noted that unlocking local savings requires navigating complex governance structures.
“There’s a board of trustees and the people on that board make the ultimate investment decision,” he said, arguing that managers needed to invest more time in building trustee confidence so that “this perception of higher risk is reduced”.
This is where fund-of-funds structures enter the debate. Abel said fund-of-funds models helped bridge this trust gap by providing diversification and enforcing governance standards across underlying funds.
An economy of ‘real problems’
Investor behaviour has also shifted. With global venture funding retreating and smaller African funds struggling to raise capital, allocators are concentrating commitments among fewer managers.
“A lot of your smaller managers are struggling to raise capital. And allocators are allocating to a more concentrated set of GPs [General Partners],” said Vuyo Ntoi, co-managing director of African Infrastructure Investment Managers.
He explained why his firm had shifted its strategy away from government-dependent projects.
“Given the macro issues, we found that reliance on governments has not been a good game plan, which has driven us to become a much more commercial and industrial player.”
Instead, the firm is focusing on commercial energy transition projects, data infrastructure and trade-enabling assets such as ports and logistics.
This recalibration aligns with Africa’s distinctive pattern of innovation. Ketso Gordhan, CEO of the SA SME Fund, said startups on the continent were built around fixing systemic failures rather than convenience gaps.
“It’s not just about Airbnb and Uber. But it’s fixing healthcare, it’s fixing education, it’s fixing agriculture to make it more efficient,” he said.
Read more: The gig economy: Video doctors on the frontlines of the Uberisation of healthcare
That focus is pulling more private capital into sectors tied to productivity and essential services.
Growth without jobs
Africa’s ability to convert growth into employment remains constrained by chronic infrastructure deficits, limited skills development and regulatory barriers.
The World Bank estimates that only 24% of Africans hold wage-paying jobs, most operating in low-productivity micro-businesses.
Read more: Africa’s great demographic challenge — the 4 factors blocking its economic dynamism
Underlying this is the debt trap we are all too familiar with. In many African countries, governments now spend more on interest payments than on public health – and in some cases more on education as well, recent debt-burden analyses find.
/file/attachments/2985/Screenshot2025-12-04at113159_795837_746b0826151937666495ef127a004294.png "In Sub-Saharan Africa, underemployment is extensive, reflecting the inability of economies in the region to create the number of steady wage jobs needed for the growing population. (Graph: World Bank)")
The continent remains vulnerable to global shocks because, by 2024, about 53% of all outstanding non-financial corporate debt in Africa was denominated in US dollars, according to the Organisation for Economic Cooperation and Development.
The African Development Bank forecasts that governments will face $61-billion in external principal repayments in 2025 while paying far higher interest rates on international markets than through multilateral lenders. Trump’s renewed tariff agenda compounds this by tightening global liquidity and distorting trade flows.
How this affects you
• Slower global growth and US tariffs raise prices of imported goods.
• Pension and retirement funds may move more money into local infrastructure and private markets.
• Continued currency volatility affects everything from petrol to food costs.
• Weak job creation across the continent feeds into SA’s own employment crisis.
• When local manufacturing capacity is increased, SA’s markets could be less reliant on imports.
• Stronger regional trade may reduce the cost of moving goods across borders.
New partners, new geopolitics
These pressures are accelerating Africa’s search for new partnerships. Pule noted that US-led reshoring had opened space for African manufacturing in diversified supply chains, if governments could fix infrastructure bottlenecks.
At the same time, global demand for energy transition minerals such as copper, cobalt and lithium was rising, prompting more African governments to consider local processing rather than raw exports.
/file/attachments/2985/Screenshot2025-12-04at104844_322820_61c437aa5e6cc0b6ab34b058f5ed4588.png "The majority (around 60%) of Africa’s marketable debt is denominated in fixed-rate local currency bonds. (Graph: OECD Africa Capital Markets Report 2025)")
Regional integration efforts, like the African Continental Free Trade Area and the African Exchanges Linkage Project, aim to provide market scale that individual countries lack.
With Western institutions cautious, McDermott said African governments were increasingly turning to Gulf and Asian investors. He pointed to a Zambian mine sale, which he said was resolved quickly after “one phone call in Abu Dhabi”, reflecting the speed at which Gulf sovereign funds can act.
Read more: Looking to other markets to counter reciprocal tariffs with reciprocal trade
Still, exits remain challenging. Labi Williams, a partner at Kuramo Capital Management, said investors looked for a trinity of macro strength, low systemic risk and currency stability – conditions rarely aligned simultaneously in African markets.
Strengthening local-currency bond markets, the OECD notes, is therefore essential to ending cycles of external debt crises.
Towards financial sovereignty
What Africa lacks is not capital but the mechanisms to deploy it confidently. Fund-of-funds vehicles are emerging as an institutional solution. They pool risk, enforce governance, and give conservative pension funds a structured path into infrastructure, manufacturing and productive assets.
Mobilising domestic savings in this way offers governments an alternative to volatile foreign borrowing and moves the continent closer to financial sovereignty.
Whether this becomes the instrument in Africa’s next growth phase depends on enforcing transparency, trustees accepting measured risk, and integrating regional markets for scale. This is Africa’s Great Calibration – a definitive move by policymakers and investors to ensure the continent finances its own future. DM