Mobilizing Institutional Capital for Africa’s Financial Sovereignty and Resilience
The Resource Mobilization and Partnerships Department (FIRM) of the African Development Bank Group (AfDB) and the Making Finance Work for Africa (MFW4A) partnership convened a high-level side event at the 2025 African Development Bank Annual Meetings. The session explored concrete solutions to unlock local institutional capital in response to the sharp decline in external funding. This physical event took place at the Sofitel Hotel in Abidjan, Côte d'Ivoire, on Wednesday, May 28, 2025, from 16h15 to 17h30.
The event served as a pivotal platform for the African Development Bank (AfDB), regional Development Finance Institutions (DFIs), and African institutional investors to convene, exchange ideas, and design collaborative strategies for developing sustainable co-financing options for Africa's development. Specifically, this gathering aimed to
- Reframe the narrative around development finance—positioning domestic capital as a sovereign imperative rather than a secondary supplement to external aid.
- Catalyze institutional and ecosystem-level action—identifying regulatory reforms, co-financing structures, and de-risking tools that can channel domestic capital toward productive sectors.
- Define a roadmap for collective action—outlining next steps, pilot mechanisms, and engagement opportunities to advance the mobilization of domestic resources post-AMs.
The event was live-streamed on the AfDB’s YouTube channels in both English and French; click a link below to watch:
EN: https://www.youtube.com/
FR: https://www.youtube.com/
Event Report is available HERE
Rationale and Background
In recent years, Africa has faced a steady decline in international development financing, both in the form of Foreign Direct Investment (FDI) and Official Development Assistance (ODA). This trend worsened in 2025, with the United States announcing the closure of USAID, the United Kingdom slashing its ODA budget due to fiscal pressures and security concerns, and the Netherlands committing to a €2.4 billion annual cut by 2027. These decisions are impacting all major development budget lines.
A shift in donor priorities is driving these reductions. Many governments are reallocating resources to address domestic challenges—such as social cohesion, migration management, and security—amid tightening fiscal space and rising geopolitical uncertainty. As a result, development financing is increasingly diverted to regional stabilization efforts rather than global development cooperation.
This shift underscores the urgent need for African countries to mobilize alternative sources of funding. The African Development Bank estimates a $402 billion annual gap in financing needed to achieve the Sustainable Development Goals (SDGs) through 2030. With ODA and FDI in decline, domestic resource mobilization has become not just urgent but indispensable.
Institutional investors in Africa—including pension funds, insurance companies, sovereign wealth funds, and national savings institutions like Caisses des Dépôts—hold over $2 trillion in assets. These funds offer immense potential to close financing gaps. As local investors grow more attuned to the returns available within regional markets, there is a compelling opportunity to leverage their capital for development. Mobilizing domestic institutional capital will not only improve financing resilience but also reinforce financial sovereignty and regional stability.
However, significant barriers remain. Institutional investors face challenges related to capacity, regulation, and macroeconomic policy. In many countries, high-yield government securities crowd out investment in infrastructure or green assets. Without the right incentives and enabling policies, long-term, high-impact investments remain unattractive.
To confront these issues, the Resource Mobilization and Partnerships Department (FIRM) and the Making Finance Work for Africa (MFW4A) platform are convening a high-level side event at the 2025 African Development Bank Annual Meetings. The session will explore concrete solutions to unlock local institutional capital in response to the sharp decline in external funding.
The timing is strategic. As ADF-17 replenishment efforts advance and the global aid landscape shifts, it is critical to spotlight domestic capital as the engine of Africa’s development.
The session was chaired by the president of the African Development Bank Group, signaling political leadership at the highest level. It also aligned with the African Union’s call to better harness domestic resources—especially pension funds—for long-term investment in the continent.
The African Development Bank, as a trusted partner to African governments and with its mandate to mobilize development finance for Africa, is uniquely positioned to lead this agenda. Its Ten-Year Strategy (2024-2033)—launched during the 2024 Annual Meeting—emphasized the importance of scaling up finance from all sources in this context of rising needs and growing debt burdens. Boosting the mobilization of domestic finance and deepening financial sectors is a central theme of the strategy.