East African Nations Explore Pension Fund Collaboration for Infrastructure Development
East African countries are exploring innovative ways to pool their pension resources in order to finance critical infrastructure projects. This initiative comes at a time when international funding for such projects is declining, and the continent faces a significant financing gap.
The All Africa Pension Summit (AAPS) 2025, held at the Speke Resort Munyonyo Conference Centre in Kampala, Uganda, provided a vital platform for addressing these challenges. The summit, which lasted three days, focused on mobilizing capital that is already available within Africa, particularly through its pension funds. According to the African Development Bank (AfDB), Africa faces a staggering $1.3 trillion annual financing gap for infrastructure development.
A Call for Strategic Use of Pension Funds
The summit’s theme emphasized the urgent need to transform pension funds from passive repositories of trust into active engines of development. The eight East African partner states—Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo—are considering pooling their estimated $400 billion in pension assets to fund infrastructure and other developmental needs.
Betty Amongi Ongom, the Ugandan Minister of Gender, Labour and Social Development, addressed delegates with a compelling message. She questioned what legacy is being built if these funds remain in reserve or benefit economies far from home. “The pensions you manage represent the hard-earned security of our parents, our workers and our future generations,” she said. “But what legacy are we truly building if these funds are merely held in reserve?”
Examples of Successful Pension Fund Investments
Minister Amongi Ongom highlighted several examples of African pension funds that have successfully invested in critical sectors. In South Africa, the Government Employees Pension Fund (GEPF) is managing approximately $1 billion towards renewable energy projects that enhance public services and create jobs. In Nigeria, the National Pension Commission (PenCom) has approved $2.5 billion for infrastructure projects that are essential to the nation’s development.
In Kenya, the Kenya Pension Fund Investment Consortium (KEPIC) has allocated $1 billion to agricultural development, energy, and affordable housing. Meanwhile, in Uganda, the National Social Security Fund (NSSF) is managing approximately $1.4 billion in local infrastructure projects. These investments are not just numbers on a balance sheet; they are bricks in a wall that shelters families, schools that educate children, and roads that connect communities.
Addressing Financial Challenges
Patrick Ayota, Managing Director of the National Social Security Fund (NSSF) in Uganda, emphasized the need to redirect domestic capital to finance essential socio-economic infrastructure. He noted that Africa’s heavy reliance on internal and external borrowing to bridge the financing gap is creating a debilitating debt burden. This limits resources for essential social services and economic development.
Ayota pointed out that despite Africa having one of the lowest global default rates (around 1.4 percent), the cost of capital across Sub-Saharan Africa remains disproportionately high, averaging between 8 and 9 percent. This is significantly higher than the 4 to 5 percent seen in regions like Asia. “This difference highlights a deep market imbalance,” he said. “Despite Africa’s growing creditworthiness, our economies still pay a significant premium to access financing.”
Building a Fairer Financial Landscape
The solution, according to Ayota, lies in pooling resources from pension funds to create an investment vehicle that can help bridge the financing gap. This must be done without negatively impacting the immediate beneficiaries of the funds, the contributors.
He stressed the importance of enacting legal structures, financing vehicles, and addressing risk measures to ensure that funds are used for their intended purposes. “It’s time we address this structural challenge and build a fairer, more enabling financial landscape for Africa’s development,” Ayota concluded.
Conclusion
The collaboration among East African nations to pool pension resources represents a promising step towards sustainable infrastructure development. By leveraging existing capital and investing in critical sectors, these countries can break the cycle of debt and dependency on foreign financial institutions. This approach not only supports economic growth but also ensures that the hard-earned savings of citizens are used to build a better future for all.