• Lagos generates 19,000MW off-grid electricity ahead of 5,000MW national grid 
• Pensions, overseas remittances, SWF to lead infrastructure development 

Africa has over $4 trillion in domestic capital that can be mobilised to close the continent’s infrastructure gap, but the funds are helping to close the infrastructure deficit, Africa Finance Corporation (AFC) said yesterday. 
  
The 2025 State of Africa’s Infrastructure (SAI) Report, published by AFC, presents the most detailed assessment of Africa’s investable capital landscape. 
  
The report identifies more than $1.1 trillion in long-term institutional capital from pension funds, insurers, Sovereign Wealth Fund (SWF) and development banks.  
  
In addition, African commercial banks hold over $2.5 trillion in assets, and central banks hold more than $470 billion in reserves. Despite this substantial pool of domestic capital, the report finds that most of it is invested in low-risk, short-term instruments, with very little flowing into infrastructure or productive sectors of the economy.
  
AFC President and Chief Executive Officer (CEO, Samaila Zubairu, called for a shift in policy and investment strategy. “This report provides a practical roadmap for how Africa can channel its significant financial strength into the infrastructure needed to drive industrial transformation, from scaling electricity supply to revitalising rail and building strategic industries like steel and fertilisers,” he said.
  
The report highlights Africa’s persistent underinvestment in energy as the continent’s most urgent development challenge.  In 2024, Africa added just 6.5GW of grid-connected power capacity, compared to 18GW of renewables added in India and 48.6GW in the United States.
  
Electricity generation in Africa is growing at less than two per cent, a rate which is far below population and economic growth. This development, according to the report, is resulting in a decline in per capita electricity consumption. 
  
The report argues that this failure to scale energy systems threatens industrialisation and economic competitiveness. Africa has enormous energy potential, including the world’s largest untapped hydropower capacity, vast solar resources and significant geothermal reserves. Yet much of this remains stranded due to weak infrastructure and limited investment.  
  
The report calls on the continent to add at least 16GW of new grid-connected capacity per year until 2050, alongside $3 billion to $4 billion in yearly investment in transmission infrastructure.
  
The report emphasises the importance of regional integration to improve energy efficiency and reliability as AFC notes that power interconnections such as those underway in the West African Power Pool can enable electricity trade between countries with surplus capacity and those with deficits.
 
While grid expansion is slow, off-grid and captive power systems are expanding rapidly, especially in Nigeria and South Africa.  In Lagos State alone, off-grid capacity is estimated at over 19GW, exceeding the country’s entire grid-connected capacity. South Africa has also seen a surge in embedded generation projects driven by regulatory reforms, the report noted. 
  
However, AFC warns that off-grid growth reflects systemic failures in public power supply. Self-generation is often more expensive and unreliable, especially for industrial users.
  
In contrast to energy, the transport sector, particularly rail, is showing signs of progress. More than 7,000 kilometres of new railway lines are under construction or planned across the continent.
  
AFC has launched a Digital Map of African Railways to support investor engagement and improve project coordination.The report also identifies opportunities in key industrial inputs such as steel, fertilisers and refined fuels.  Africa imports around $300 billion worth of these products yearly, but has the resources to produce them locally. For example, iron ore reserves in West Africa could support steel production, while gas-rich countries like Nigeria, Angola and Mozambique could develop fertiliser industries.
  
The bank noted that Nigeria remained a case study in how to unlock pension capital for infrastructure without imposing mandates.  As of early 2025, Nigeria’s pension assets had grown to N22.8 trillion ($14.2 billion). However, credit and liquidity risks limited infrastructure investment.
  
To address this, Nigeria created InfraCredit in 2017, a public-private credit guarantee company supported by AFC, the Nigeria Sovereign Investment Authority (NSIA) and other partners. InfraCredit provides guarantees for local currency infrastructure bonds, making them investment-grade and suitable for pension funds.
  
Since its inception, InfraCredit has supported infrastructure projects in renewable energy, gas distribution and logistics. Pension fund investment in infrastructure has increased from N1.2 billion to over N242 billion (about $155 million), demonstrating the success of targeted de-risking tools.
  
The report draws attention to rising energy needs from the digital sector, noting that data centres, telecom towers and broadband services require large amounts of reliable electricity. 
  
In many African countries, poor grid access forces telecom operators to rely on expensive diesel generators, raising costs and hindering digital expansion.
  
To address this, the report calls for integrated energy and digital planning, as well as investment in renewable energy solutions for digital infrastructure.