African pension funds turn to domestic capital to meet development needs

KAMPALA, UGANDA — Pension providers across Africa are moving to pool their assets, worth a combined $700bn (£575bn), to create a new “Development Fund for Africa.”

The move marks a significant shift, with industry leaders stating the continent must reduce its reliance on traditional foreign funding and instead utilise its own substantial capital to meet pressing infrastructure and social goals.

The initiative is being driven by mounting concerns over the continent’s annual financing gap, which the African Development Bank estimates is more than $1.3tn. It also comes amid a global realignment of geopolitics and a reduction in foreign aid flows.

The announcement was made ahead of the “700b in 1 Room” All Africa Pensions Summit in Kampala, set for 5-7 November. The summit, hosted by the National Social Security Fund (NSSF) Uganda, is aimed at securing commitments to deepen the pool of “patient capital” for long-term investments.

Patrick Micheal Ayota, managing director of NSSF Uganda, stressed the opportunity this presents.

“Pension funds across Africa hold about $700 billion in assets under management. This is a major opportunity for Africans to catalyse our own economies by providing funding that is not tied to unfavourable conditions from foreign funding agencies,” he said.

Mr. Ayota, whose fund is the largest in East Africa, valued at more than $7bn, added that traditional foreign funding models are no longer sufficient to sustain the pace of the continent’s infrastructure requirements.

The United Nations Resident Coordinator for Uganda, Leonard Zulu, was emphatic that Africa must look inward, focusing on domestic savings, diaspora remittances and blended financing models to reduce aid dependency.

“The traditional models of development cooperation are being redefined, and official development assistance, though vital, is no longer sufficient to meet the scale and complexity of the challenges Africa faces today,” Mr. Zulu stated.

He further noted that 15 of the 20 traditional donor partners have cut funding, highlighting an urgent need to shift focus from aid to trade and enable small and medium enterprises to access capital.

Meshach Bandawe, the Secretary General of the Africa Social Security Association (ASSA), confirmed that the association’s 51 member funds are increasingly recognised as “critical levers” for inclusive development.

“African pension providers must coalesce around this new approach, given that the sources of foreign funding are drying up,” Mr. Bandawe said. He highlighted successful examples in countries like Tanzania where locally mobilised capital from pension funds has already been deployed.

African pension funds turn to domestic capital to meet development needs

KAMPALA, UGANDA — Pension providers across Africa are moving to pool their assets, worth a combined $700bn (£575bn), to create a new “Development Fund for Africa.”

The move marks a significant shift, with industry leaders stating the continent must reduce its reliance on traditional foreign funding and instead utilise its own substantial capital to meet pressing infrastructure and social goals.

The initiative is being driven by mounting concerns over the continent’s annual financing gap, which the African Development Bank estimates is more than $1.3tn. It also comes amid a global realignment of geopolitics and a reduction in foreign aid flows.

The announcement was made ahead of the “700b in 1 Room” All Africa Pensions Summit in Kampala, set for 5-7 November. The summit, hosted by the National Social Security Fund (NSSF) Uganda, is aimed at securing commitments to deepen the pool of “patient capital” for long-term investments.

Patrick Micheal Ayota, managing director of NSSF Uganda, stressed the opportunity this presents.

“Pension funds across Africa hold about $700 billion in assets under management. This is a major opportunity for Africans to catalyse our own economies by providing funding that is not tied to unfavourable conditions from foreign funding agencies,” he said.

Mr. Ayota, whose fund is the largest in East Africa, valued at more than $7bn, added that traditional foreign funding models are no longer sufficient to sustain the pace of the continent’s infrastructure requirements.

The United Nations Resident Coordinator for Uganda, Leonard Zulu, was emphatic that Africa must look inward, focusing on domestic savings, diaspora remittances and blended financing models to reduce aid dependency.

“The traditional models of development cooperation are being redefined, and official development assistance, though vital, is no longer sufficient to meet the scale and complexity of the challenges Africa faces today,” Mr. Zulu stated.

He further noted that 15 of the 20 traditional donor partners have cut funding, highlighting an urgent need to shift focus from aid to trade and enable small and medium enterprises to access capital.

Meshach Bandawe, the Secretary General of the Africa Social Security Association (ASSA), confirmed that the association’s 51 member funds are increasingly recognised as “critical levers” for inclusive development.

“African pension providers must coalesce around this new approach, given that the sources of foreign funding are drying up,” Mr. Bandawe said. He highlighted successful examples in countries like Tanzania where locally mobilised capital from pension funds has already been deployed.