One idea has increasingly risen to the top of both policy debates and practical investment strategies: local private capital mobilization. Simply put, this means encouraging investment from within Africa, by domestic companies, financial institutions, wealthy individuals, pension funds, and local venture and private equity players, to fuel economic growth, innovation, job creation, and resilience. While foreign capital and aid will always play a role, the true engine of sustained, inclusive growth lies in harnessing Africa’s own financial resources and entrepreneurial muscle.
The biggest question is, if local investors do not believe in African businesses, why should international investors care?
Why Local Private Capital Mobilization Is Essential
A Sustainable, Home-Grown Growth Engine
Development dependent on external debt or aid is inherently fragile. Foreign financing can be volatile, subject to exchange rate risks, geopolitical shifts, and changing appetite among global investors. When capital is mobilized locally, it stays anchored in the local currency, reducing exposure to global shocks and foreign exchange volatility. This deepens domestic financial markets and empowers local investors to take ownership of their development trajectory, from infrastructure to technology, manufacturing to services.
Bridging Development Financing Gaps
The financing needs of African economies, whether for infrastructure, climate adaptation, or digital transformation, far exceed what governments and international donors alone can provide. Institutions like the African Development Bank have repeatedly called for intensified local private capital mobilization to close structural funding gaps critical for sustainable development. If African entities like banks and pension funds dedicated even 1% of their assets to risk capital, it would be a game-changer. These sectors not only generate employment, but they also solve everyday challenges for citizens, from improving financial inclusion to strengthening value chains in agriculture.
Local investors are uniquely positioned to understand these market needs and back solutions that matter. They are less sensitive than international investors to political risk, currency risks, and so on. They are far more resilient to social and political turmoil or conflicts.
Democratizing Economic Participation
When local capital is mobilized effectively, it means more ordinary citizens and domestic institutions (like pension funds, domestic companies, and retail investors) participate in the wealth-creation process. The returns or profits from successful ventures remain on the continent. This spreads economic opportunity, builds societal trust, and embeds economic growth in local communities.
Boost Africa: A Game-Changing Catalyst
Mobilizing local private capital isn’t easy. Perceived risk, a penchant for only investing in sectors they understand as opposed to using experienced intermediaries like venture capital funds, the fact that a good number of first-time/ emerging investment funds are seen as inexperienced, have historically deterred local private investors. This is where strategic initiatives like the Boost Africa programme, spearheaded by the European Investment Bank (EIB) in partnership with the African Development Bank and supported by the European Union, are making a real difference.
Launched to address Africa’s early-stage financing gap and stimulate innovation, Boost Africa is not just a funding programme; it’s a catalytic ecosystem builder. Its approach combines financing with capacity building, de-risking mechanisms, and strategic partnerships to unlock sustainable private investment across the continent.
Here’s how it works:
Catalytic Capital to Venture Funds: Boost Africa invests in venture capital and private equity funds across the continent, including TLcom Tide Africa, Partech Africa, AfricInvest, and others, providing the seed liquidity needed to attract additional investors. By structuring junior tranches (where the EIB takes on a share of the initial potential losses), it lowers the risk for private co-investors and encourages them to commit capital.
Mobilizing Additional Investment: This initial ‘seal of confidence’ has paid off. EIB’s €78 million investment has helped mobilize hundreds of millions of euros from private and public partners, creating a multiplier effect far beyond the original funds.
Technical Assistance and Ecosystem Support: Beyond capital, Boost Africa provides technical assistance to fund managers and entrepreneurs, strengthening business models, financial management, compliance, and growth strategy. It even supports incubators and accelerators, fostering a richer innovation culture.
Focused Inclusion and Impact: Importantly, Boost Africa targets women and youth entrepreneurs and invests in sectors, such as ICT, agribusiness, healthcare, financial services, and renewable energy, that have both high growth potential and strong development impact.
The result? Tens of thousands of jobs created, dozens of high-growth companies backed, and a new generation of African entrepreneurs empowered to build scalable, globally competitive businesses with deep local roots.
The road ahead still needs a lot of improvement.
If Africa is to achieve its full economic potential, local private capital mobilization must move from aspiration to reality. This means improving financial market depth, regulatory reforms to unlock pension and insurance capital for long-term investments, and continued partnerships between development finance institutions and private investors.
Initiatives like Boost Africa demonstrate how strategic early-stage support, de-risking mechanisms, and local ecosystem strengthening can encourage investors sitting on the fence to invest in Africa. By helping domestic investors to step forward with confidence, Africa doesn’t just attract capital — it creates a self-reinforcing cycle of entrepreneurship, jobs, and inclusive prosperity that belongs to Africans first and foremost.
In an era where traditional external financing is constrained, and global uncertainties loom large, mobilizing local private capital isn’t just important; it is essential for Africa’s sustainable and sovereign economic future.