https://arab.news/5hjwq
African economies will not be able to meet their development goals unless they can mobilize their own resources. But to do that, policymakers must confront a fundamental question: Where are the investment platforms that are needed to effectively channel domestic savings into productive investment?
Africa’s problem is not a shortage of savings. Across the continent, pension funds, insurers, sovereign wealth funds and banks already hold about $1 trillion in long-term capital and those pools are growing steadily. Nor is it a lack of appetite: African institutional investors would welcome credible, well-structured opportunities to invest at home.
What is missing are the pathways that connect savings to productive investment. Without them, capital gravitates toward the simplest instruments available. In most African markets, that means short-term sovereign bonds. However ambitious investors may be, their options remain limited by the financial architecture.
This distinction matters. Much of the debate about mobilizing domestic savings assumes that capital must somehow be “unlocked.” But these savings are not idle. They are channeled primarily into government debt — accounting for about 60 percent to 70 percent of pension fund portfolios in many African countries because no scalable alternatives exist. Prudential rules, rigid regulatory frameworks and the near-total absence of diversified, credit-enhanced long-term instruments leave pension funds with little choice but to invest heavily in government securities.
