Africa's $4 Trillion in Assets Priced as Too Risky

Africa’s capital paradox is stark. The continent holds more than $4 trillion in domestic financial assets, yet its development is routinely priced as if it were the riskiest proposition on earth. That mismatch, according to the Africa Finance Corporation’s 2026 State of Africa’s Infrastructure Report, is not a liquidity problem but an allocation one, and correcting it has become the central argument of the corporation’s leadership.

The numbers frame the challenge. Against a $400 billion annual development financing gap, the continent’s pension funds, sovereign wealth funds and banking assets sit largely in offshore holdings or government securities. Even when African capital is deployed at home, it tends toward low-risk, short-term instruments such as Treasury bills. Industrialization, however, is a long game, and when funding flows refuse to concentrate on long-term projects, the sector that generates employment and value addition appears riskier than it actually is.

Samaila Zubairu, President and CEO of the AFC, told FORBES AFRICA that the evidence does not support the caution. “Several research papers show that Africa is not risky, and investing in infrastructure, particularly, is not as risky, but the rules for the capital charge haven’t changed,” he said, adding that stakeholders need to “understand constraints affecting capital intermediation and deployment and work to unlock that.”

The underlying asset story is compelling for any investor scanning global markets. A continent with a median age of 19, expected to hold a quarter of the world’s population by 2050 and 40% by 2100, is digitally native and primed for modernization. Its natural endowments have already triggered a bidding war: cobalt, lithium and rare earth minerals are essential inputs for artificial intelligence, renewable energy, the electric vehicle transition and consumer electronics generally. The Democratic Republic of the Congo alone holds between 50% and 70% of the world’s cobalt and is estimated by the International Trade Administration to possess $24 trillion in untapped mineral resources. Add immense hydropower, solar and wind potential, plus a concentration of uncultivated arable land and farmers that positions the region as a potential world breadbasket, and the investment case writes itself. Execution, though, is not guaranteed; financial literacy and electrification remain serious constraints.

So why does capital still treat the continent with excessive caution? The report and Zubairu point to structural reasons. High inflation and volatile currencies make long-term value difficult to predict. Banks prefer lending to governments over businesses, drying up private credit. Recent sovereign defaults in Ghana in 2022 and Ethiopia in 2023 have stained perceptions of the continent’s fiscal management.

Yet the default data tells a different story. A Moody’s assessment for the African Development Bank found Africa has the second-lowest cumulative default rate in the world, at 1.7%, compared with 10% in Eastern Europe and 13% in Latin America. “And even when there is a default, the recovery rate in Africa is the highest. Governments have recovery rates of over 90%, and the private sector has over 78%,” Zubairu noted.

His prescription centers on ownership and on instruments that change the risk calculus. Credit enhancements, he argued, work much like capital charges in banking, providing safety nets that encourage long-horizon investment. “We need to take more ownership of our development. The future has to be built by us; our children will inherit what we build. We have to be intentional and understand the various capital pools… and then the world will see and follow,” he said.

The capital pools are substantial and varied. Over $2 trillion of domestic capital sits with banks, which operate under strict regulations emphasizing liquidity. Zubairu believes regulation must balance development needs against safety and prudence, but he sees non-bank savings as the more natural engine, since they have “typically built infrastructure and industry and the future in most parts of the world.” Over $1 trillion is held in pension and insurance assets, roughly $530 billion in central bank reserves (partly dependent on gold prices), $275 billion in public development banks and $164 billion in sovereign wealth funds. Public-private partnerships offer a further route to safeguarding investment and tilting the funding equilibrium toward the long term.

Regional coordination is another bottleneck with direct economic costs. Misaligned regulations across borders make intra-regional projects tedious; some rules even prevent insurance firms from covering assets outside their own country, compounding the logistical friction of trade corridors and bloc economies. Zubairu urges pan-African thinking so institutions can invest along value chains, and views the African Continental Free Trade Area agreement as a golden opportunity for prosperity and poverty reduction. “Africa is a vast continent, and the resources are not limited by borders. The needs of the people are not limited by borders. The need for infrastructure is not limited by borders. So, we shouldn’t be constrained by borders,” he said.

The AFC’s own trajectory illustrates what is possible. When Zubairu joined the corporation eight years ago, it could not advance more than $300 million for Aliko Dangote’s oil refinery in Nigeria. “Today, we can easily do a billion dollars,” he said, noting a minimum annual investment of around $2.5 billion over the last three years.

External capital, meanwhile, is retreating. International issuance fell from over $29 billion in 2018 to between $4 billion and $6 billion in 2022 and 2023, according to the AFC report, sharpening the case for in-house intervention. The signal, in Zubairu’s telling, is that Africa is no longer an aid-dependent region but one with the demographics, resources and appetite to command the world’s biggest markets. The continent’s stock is rising; its capital conditions, however, still mirror those of a decade ago. A recalibration is not just needed. It is warranted.