African Pension Funds to Turn Inward as Tariffs Tamper Outward Business
The 8th Pension Funds and Alternative Investments Africa Conference (#PFA2025) took place in Mauritius from 8 to 9 April, 2025. The theme of the 8th edition was ‘Investing for Tomorrow to Achieve Maximum Impact and Sustainable Economic Growth.’
African Pension Funds cumulatively hold more than USD one trillion which is invested mostly in US Treasury Bonds or #Eurobonds. In the light of the economic headwinds caused by rising tariffs, African Pension Funds are seriously considering a shift of focus to financing development within the African continent.
Indeed, African states have to endure a high cost of capital due to an unfair sovereign rating system. Thus, African Pension Funds could contribute to the development of Africa by providing more affordable access to financing thanks to a better understanding and a more accurate assessment of the risks.
In her welcome address, Mauritian Minister of Financial Services Jyoti Jeetun highlighted Mauritius as an International Financial Centre (#IFC) in Africa, for Africa. As a matter of fact, several pension funds have already leveraged the Mauritius IFC to invest into Africa.
For instance, the Government Employees Pension Fund (GEPF) of South Africa has spread some of its liquidity across Africa via Mauritius. Indirectly, the Canada Pension Plan Investment Board (CPPIB), Ontario’s Teachers’ Pension Plan (OTPP) and California Public Employees’ Retirement System (CalPERS) are some of the large institutional investors that have partaken into investment funds targeting Africa.
The Chicago Teachers’ Pension Fund (CTPF) has invested in Africa via funds managed by Advanced Finance & Development Partners LLP and Development Partners International LLP. The US Government encouraged Pension Funds to place some of their savings into Africa via the #MIDA program, which stands for Mobilizing Institutional Investors to Develop Africa’s Infrastructure.
When referring to Africa, one tends to talk about the #DigitalDivide. However, in terms of mobile penetration, Africa has reached nearly 84% which presents an opportunity for reaching the masses. Thus, #FinTech and mobile technology could be leveraged to democratize investments and enlarge pension coverage.
Out of the one trillion dollar of assets held by African Pension Funds, 90% is concentrated in just four countries, namely, South Africa, Nigeria, Namibia and Botswana. Pension coverage across the African continent stands at only 8.5% of the workforce, compared to a global average of 32.5%.
“The gap represents a significant opportunity for Pension Funds … The disparity is particularly striking given that 80% of the African workforce operates in the informal sector. Mauritius has been reinforcing its role as a regional financial center. Our strategic location, robust regulatory framework, and proven track record as a financial hub makes Mauritius ideally suited to facilitate growth of Pension Funds and Alternative Investments.”
Mauritius Minister of Financial Services Jyoti Jeetun
Over the past few years, the Mauritius #IFC has been undertaking a journey to evolve into a Green Finance Gateway (#GFG) for Africa. Mauritius hosts the Commonwealth Climate Finance Access Hub (CCFAH) and the headquarters of the Indian Ocean Commission (IOC). Both organizations are pursuing a strategy oriented towards sustainable development and the circular economy backed by #GreenFinance and #ClimateFinance.
With the US raising tariffs across the board, the world economy is expected to take a hit. Hence, the more reason for African funds to put their money to work within the continent where there are still good prospects for growth and profit.