Key Takeaways
- • African-focused venture capital fund managers raised only $107 million in 2025, representing an 87% year-on-year decline, signaling a severe contraction in foreign capital availability for the continent's risk-asset ecosystem.
- • European investor participation in African venture funds collapsed from approximately 70% of capital commitments (2022–2024) to just 21% in 2025, creating a critical financing gap that domestic institutions must address.
- • AFC President Samaila Zubairu argues African pension funds and institutional investors must substantially increase equity capital deployment to replace retreating foreign capital and support business expansion across the continent.
- • Africa's digital economy alone is projected to contribute over $700 billion to continental GDP, while venture capital increasingly extends beyond technology into healthcare, agriculture, logistics, and manufacturing—sectors requiring sustained domestic equity funding.
- • The strategic imperative centers on mobilizing Africa's estimated $4 trillion in domestic capital through improved regulatory frameworks and investment structures, positioning institutional investors as primary risk-capital providers rather than relying on volatile external funding sources.
Summary
Samaila Zubairu, President and Chief Executive Officer of the African Finance Corporation, has issued a stark warning about Africa's venture capital funding crisis, arguing that the continent cannot sustainably depend on foreign investors for risk capital. Speaking at a venture capital roundtable in Lagos on September 18, 2026, Zubairu emphasized the urgent need for Nigerian pension funds and other African institutional investors to substantially increase their participation in venture capital to fill the widening financing gap created by declining external investment.
The scale of the contraction is substantial. African-focused fund managers raised approximately $107 million in 2025, marking an 87% decline year-over-year. More dramatically, European investors—historically the primary source of capital for African venture funds—reduced their share from roughly 70% between 2022 and 2024 to just 21% in 2025. This shift reflects a broader trend of international capital retreating from emerging African markets, driven by increased investor caution and shifting global risk appetites.
Zubairu's case for domestic capital mobilization rests on both economic opportunity and institutional capacity. Africa's digital economy is projected to contribute more than $700 billion to the continent's GDP, while venture capital is increasingly supporting sectors beyond technology, including healthcare, agriculture, logistics, and manufacturing. Pension funds, which hold long-term domestic savings with extended investment horizons, are positioned as ideal institutional vehicles to provide the sustained equity risk capital required for business development and expansion. This capital structure aligns fund liability profiles with the illiquidity and extended time horizons inherent in venture capital investments.
The broader policy implication, reflected in statements from Central Bank of Nigeria Governor Yemi Cardoso and others, is that Africa must organize and deploy its existing capital base—estimated at $4 trillion domestically—rather than perpetually seeking external financing. Zubairu has noted that African-led investment structures do not preclude international participation; recent examples including gold mining projects in Sierra Leone demonstrate successful hybrid models combining African institutional capital with international sovereign wealth and development partners. The challenge remains regulatory framework design and investment structuring that enables pension funds and other institutional investors to commit capital at scale to venture equity.
The scale of the contraction is substantial. African-focused fund managers raised approximately $107 million in 2025, marking an 87% decline year-over-year. More dramatically, European investors—historically the primary source of capital for African venture funds—reduced their share from roughly 70% between 2022 and 2024 to just 21% in 2025. This shift reflects a broader trend of international capital retreating from emerging African markets, driven by increased investor caution and shifting global risk appetites.
Zubairu's case for domestic capital mobilization rests on both economic opportunity and institutional capacity. Africa's digital economy is projected to contribute more than $700 billion to the continent's GDP, while venture capital is increasingly supporting sectors beyond technology, including healthcare, agriculture, logistics, and manufacturing. Pension funds, which hold long-term domestic savings with extended investment horizons, are positioned as ideal institutional vehicles to provide the sustained equity risk capital required for business development and expansion. This capital structure aligns fund liability profiles with the illiquidity and extended time horizons inherent in venture capital investments.
The broader policy implication, reflected in statements from Central Bank of Nigeria Governor Yemi Cardoso and others, is that Africa must organize and deploy its existing capital base—estimated at $4 trillion domestically—rather than perpetually seeking external financing. Zubairu has noted that African-led investment structures do not preclude international participation; recent examples including gold mining projects in Sierra Leone demonstrate successful hybrid models combining African institutional capital with international sovereign wealth and development partners. The challenge remains regulatory framework design and investment structuring that enables pension funds and other institutional investors to commit capital at scale to venture equity.
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