Global shocks seen spurring African pivot to domestic capital

Rising geopolitical uncertainty is driving African financiers to tap domestic capital, as governments roll out policies, regulations and incentives to fund projects.

From the Covid-19 pandemic to the US trade war, along with the Russia-Ukraine and Middle East conflicts, each shock has accelerated the shift toward domestic funding, said Ory Okolloh, a partner at Verod-Kepple Africa Ventures. Startup debt in particular is gaining traction as a source of funding, she said.

“What we’re realizing as a continent, we cannot continue to be subject to other people’s crises, challenges, presidents,” Okolloh said.

The pool of available financial resources with banks, pension funds, insurers and sovereign institutions on the continent now stands at $4 trillion, according to the Africa Finance Corp. Easier rules for pension funds in countries including Nigeria and Ghana have helped venture capital and private equity firms tap these funds as Western financiers balk.

“As part of the coping mechanism in terms of capital flows, investment, we are turning to local capital,” George Odo, a senior partner covering east and southern Africa at AfricInvest. “We expect to see more local capital.”

African investors accounted for 21% of private capital commitments in 2025, according to Nadia Kouassi Coulibaly, head of research at the African Private Capital Association. That compares with 19% a year earlier and 14% in 2022, she said.

Global foreign direct investment fell by 11% to $1.5 trillion in 2024, marking a second straight year of decline, according to the UN Trade and Development. Inflows to Europe plummeted 58% in 2024, while Latin America and the Caribbean and Asia saw drops of 12% and 3% respectively.

A wave of semiconductor megaprojects in the US drove FDI flows up by 20% and Africa grew 12%, supported by investment reforms across the continent, according to the UN agency’s World Investment Report 2025.

Authorities in several African nations are paying more attention to policies and regulations that promote domestic fundraising and deepening capital markets, Nairobi Securities Exchange Chief Executive Officer Frank Mwiti said. The trend is expected to accelerate, he said.

“We’re not going to go back to the world before the fracas in the Middle East,” Mwiti said. “A lot has changed.”

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