African leaders and investors are uniting around fund-of-funds structures, governance reforms, and domestic pension funds to direct private capital toward infrastructure and manufacturing. This approach addresses persistent economic challenges amid steady but job-scarce growth. Experts at a recent conference highlighted a shift toward self-reliant development strategies.
Africa's economic landscape is undergoing a recalibration as policymakers and investors focus on mobilizing domestic savings through fund-of-funds models to invest in productive sectors. The African Development Bank projects regional GDP growth of about 4% in the coming year, surpassing global averages, yet falling short of the 25 million annual wage-paying jobs required, according to the World Bank. Only 24% of Africans currently hold such jobs, with many in low-productivity micro-businesses.
At the SuperReturn Africa conference, John McDermott, chief Africa correspondent for The Economist, described a 'vibe shift' where leaders reject passive reliance on Western aid. He noted a 'widespread agreement that Africa no longer outsources its own government needs,' framing it as 'two Magas': Trump-era protectionism externally and an internal push to 'Make Africa Great At Last.'
Challenges persist in shallow capital markets, which represent just 1% of global equity capitalization, with pension funds favoring government debt. Ghana and Namibia have mandated minimum local investments, but Eva Abel of Oryx Impact warned that early losses in alternative assets have made trustees cautious. 'Pension funds do not necessarily need to have the highest returns in the world,' she said, adding that pioneers 'have lost money.' Bame Pule of Africa Lighthouse Capital emphasized building trustee confidence to reduce perceived risks.
Fund-of-funds structures address this by offering diversification and governance standards. Vuyo Ntoi of African Infrastructure Investment Managers observed allocators concentrating on fewer general partners amid funding struggles for smaller managers. His firm has pivoted to commercial projects in energy transition, data infrastructure, and logistics, avoiding government dependency. Ketso Gordhan of the SA SME Fund noted startups target systemic issues in healthcare, education, and agriculture.
Debt burdens exacerbate vulnerabilities, with 53% of corporate debt in US dollars and $61 billion in external repayments due in 2025. Governments often prioritize interest payments over health or education. New partnerships with Gulf and Asian investors, alongside initiatives like the African Continental Free Trade Area, aim to enhance financial sovereignty through local-currency bonds and regional integration.