BRIAN MARSHALL | Africa’s capital paradox demands smarter markets, not more money

I recently had the opportunity to join the inaugural Loan Market Association and International Capital Market Association Annual Africa Summit in Cape Town.

I formed part of a panel discussion examining how African capital markets can evolve to support economic growth and deeper regional integration. The conversation focused on expanding market access, improving institutional frameworks and attracting sustainable capital flows across the continent.

Early in the discussion, the moderator posed a question that captures one of the most persistent contradictions in the African investment story — namely, how is a continent widely described as “capital-hungry” also a net exporter of capital?

Answering that question requires stepping back from the assumption that Africa lacks funding. The continent already has significant pools of capital. In fact, when pension assets, insurance balance sheets, bank capital and sovereign investment vehicles are considered together, there is an estimated $4-trillion in investable capital across the continent. Somewhat ironically though, Africa also faces a substantial infrastructure financing gap of between $130bn and $180bn each year.

These figures highlight the scale of both the opportunity and the challenge. The issue is not simply the availability of capital. The more pressing question is how that capital can be mobilised effectively into projects and businesses that drive growth.

One of the obstacles is that too many projects across the continent remain conceptual rather than investable. Development strategies often identify compelling opportunities in sectors such as infrastructure, energy, logistics and digital connectivity. However, turning those opportunities into bankable projects requires detailed preparation, clear risk allocation and policy frameworks that give investors confidence.

Unlocking that potential depends on the right policy and regulatory frameworks. Tax treatment, investment guidelines and market structures all influence whether domestic institutional capital can participate meaningfully in infrastructure and private markets

Capital tends to follow certainty. Without predictable regulatory environments and well-structured transactions, even large pools of domestic capital will hesitate.

Another challenge lies in how African opportunities are structured for investment. Historically, many projects have relied on relatively narrow funding sources, often centred on bank balance sheets or a single group of lenders. Increasingly, however, successful transactions need to be built around layered capital structures that bring together different pools of capital with varied but complementary mandates.

Domestic investors, development finance institutions and international capital providers can each play these complementary roles within these structures. Blended approaches allow risk to be shared across participants while enabling projects to reach financial close on terms that work for both sponsors and lenders.

Domestic institutional capital has the potential to play a much larger role in long-term investment. Pension funds and insurance companies manage assets that are naturally aligned with infrastructure projects, which often generate stable, long-dated returns. Even relatively small allocations could have a meaningful impact. For example, allocating just 5% of pension assets toward long-term infrastructure investment could unlock around $20bn in additional capital each year for projects across the continent.

Unlocking that potential depends on the right policy and regulatory frameworks. Tax treatment, investment guidelines and market structures all influence whether domestic institutional capital can participate meaningfully in infrastructure and private markets.

There is also a broader structural question about how African capital markets evolve. Many markets remain fragmented along national lines, even though economic activity increasingly spans regional value chains and supply networks. Greater regional co-operation does not require full harmonisation, but it could significantly improve liquidity, scale and capital mobility.

During the panel discussion, several participants emphasised that strengthening African capital markets will ultimately depend on a combination of market reform, improved transparency and practical collaboration between public and private sector participants. Progress has already been made in many of these areas over the past decade, but there remains considerable scope to deepen markets further.

For investors, the opportunity set across Africa continues to expand. Infrastructure development, energy transition, digitalisation and industrialisation all require significant capital. Meeting those needs will depend not only on attracting international investment but also on mobilising the capital that already exists within the continent.

Seen from that perspective, the challenge and opportunity are less about discovering new capital than about building the structures that allow existing capital to move more efficiently. That is the work that will ultimately determine how quickly Africa’s capital markets deepen over the coming decade.

• Marshall is head of investment banking, Standard Bank Corporate and Investment Banking