Why the issue with Africa’s pension funds is not money

That contradiction, described as “a crisis of belief, not a crisis of money,” dominated discussions at the All Africa Pension Summit in Kampala, which started on November 5 and runs until November 7, where pension fund managers, government officials and development partners were urged to channel African savings into African development.

Chairperson of the East Africa Venture Capital Association, David Owino, said in the discussion with an unvarnished assessment.

“Africans do not believe in developing themselves. There are people who believe in developing Africa more than Africans do,” he said.

Mr Owino, whose organisation represents private equity, venture capital and institutional investors across East Africa, said African pension funds provide less than one percent of the capital used by private equity firms investing on the continent.

“Ninety-nine percent of the funds we invest in Africa come from outside Africa. If we do not trust ourselves, develop our own structures, and innovate our own ways of developing ourselves, nobody will do it for us,” he said.

He stressed that even a small shift in pension allocations could have significant impact.

“We are simply asking: can we get about ten percent or even five percent allocated to economic development? If we only got the one percent Patrick spoke about, it would go a long way.”

One percent of Africa’s pension savings, now above $1 trillion, would unlock more annual financing than what private equity is currently investing in the continent. Mr Owino argued that Africans already save, the problem lies in where their money is invested.

“We have dead capital. People buy small pieces of land hoping it grows in value,” he said.

He noted the existence of modern investment platforms, personalised pension products, circles and money market funds, but insisted the real issue is trust. “It is just trust. Straight from the employee to the employer to the fund manager.”

He shocked the room with an example: the Norwegian Sovereign Wealth Fund is the single largest shareholder of Equity Bank.

“Who is banking in the bank? Not Norwegians. Tanzanians. Ugandans. Kenyans. Why don’t we own our assets?”

He asserted: “We must find the solutions ourselves. Let us not let this opportunity pass us by.”

Earlier, Patrick Ayota, Managing Director of NSSF Uganda, laid out the numbers. Africa, he said, faces an annual financing gap of $1.3 trillion, including a $200 billion infrastructure deficit.

Meanwhile, the continent borrows at an average interest rate of 8–9 percent, compared with 4–5 percent in Asia, despite Africa having one of the lowest default rates in the world.

“This paradox reveals a fundamental market failure. Despite proving our creditworthiness, Africa pays the highest premiums,” Ayota said.

He described pension funds as ‘patient capital,’ well suited for long-term development, and revealed that pension assets in Africa grew from $420 billion in 2019 to more than $1 trillion in 2024.

Just one percent of those funds could unlock $10 billion annually for infrastructure, housing, energy, transport and digital investments.

Mr Ayota compared Uganda with Singapore, two countries that gained independence just one year apart.

Today, Singapore’s savings rate is 57.8 percent of GDP while Uganda’s is 23 percent.

“The growth of the Asian Tigers was not built on aid, it was built on disciplined domestic savings that financed their own industrialisation,” he said.

United Nations Resident Coordinator in Uganda, Leonard Zulu, reinforced the case for local investment.

“The question is not whether pension plans should help finance sustainable development. It is how to do so prudently, at scale, and with measurable impact,” he said.

He noted that pension funds benefit citizens twice: as retirement savings and through infrastructure that improves daily lives.

“If we do our work exceptionally well, those savings will return to them as power that lights their homes, roads that link their markets, and clinics that heal their families.”

Mr Zulu pledged UN support in preparing investable projects, building standards and reducing risk.

Uganda’s Prime Minister, Robinah Nabbanja, speaking on behalf of President Yoweri Kaguta Museveni, said Africa has no justification for failing to use its own savings to fund development.

“Historically, Africa’s problem has been one of underutilised potential,” Museveni said in her speech. “A paradox of a poor population surrounded by abundant natural resources.”

He emphasised that while Africa has always had land and labour, it lacked capital and entrepreneurship, and pension funds offer a solution.

“Africa’s pension funds, estimated at $1.4 trillion, provide a rare opportunity to raise capital for electricity, roads and railways,” he said.

Uganda’s Permanent Secretary for Finance added that pension assets in Uganda have grown to UGX 25.4 trillion, equivalent to 12 percent of GDP, and will be channelled into well-prepared national projects.

“Our savings are our sovereignty,” he said. “By leveraging domestic capital wisely, we can build the foundation for the next generation of African prosperity.”

The most emotional call to action came from Uganda’s Minister for Gender, Labour and Social Development, Betty Amongin: “Do we want these funds to just be held in reserve? Or do we want them to build schools, hospitals, infrastructure for our people?”

She cautioned that Africa is trapped in dependency by relying on foreign borrowing.

“We are paying to be indebted, rather than investing to be empowered. The greatest risk is not investing in Africa’s potential. The greatest risk is failing to do so,” she said.

She urged pension funds to move from passive investment to active nation-building.

“Let us invest in ourselves, for ourselves. The future is not something we wait for. It is something we build,” she said.