Faced with shrinking aid budgets and shifting donor priorities, African governments are exploring new ways to finance development, including mobilizing pension funds, attracting private investment, and strengthening regional partnerships.
The change reflects a growing focus on funding development through domestic resources, investment, and regional partnerships rather than external assistance.
Experts said that as traditional aid flows decline and donor priorities shift, development experts are urging African governments to look inward, arguing that the continent already possesses substantial financial resources that could be mobilized to fund infrastructure, industrialization, and social programs.
According to Maxwell Gomera, Resident Representative of the United Nations Development Program (UNDP) in South Africa and Director of the Africa Sustainable Finance Hub, governments across the continent are already adapting.
“South Africa has recently put in place mechanisms from its own budget to replace funding that previously supported HIV/AIDS programs after that support was withdrawn. Rwanda and many other countries are also increasingly looking inward and asking how domestic resources can do more,” he said.
Gomera argued that the discussion should not focus solely on declining aid flows, but rather on the vast resources already present within African economies.
“For too long, we have assumed that Africa’s main challenge is a shortage of capital. In reality, Africa is not capital-scarce. It is disconnected. Across the continent, there are pension funds, insurance assets, remittances, sovereign wealth funds, and private savings worth trillions of dollars. The challenge is connecting those resources to the investments that countries need.”
He pointed to pension funds as one example of domestic capital that could play a much larger role in financing development.
The Rwanda Social Security Board (RSSB), for example, manages assets worth more than RWF 3 trillion, equivalent to approximately US$2.2 billion, he said.
“Imagine a country needs to build a road to an airport; there is nothing that prevents a pension fund from helping finance that road. Users pay a toll, the toll revenues repay the investment, pensioners receive a return, and the country gets the infrastructure it needs.”
According to Gomera, many of the world’s successful economies financed major infrastructure and industrial expansion using long-term domestic capital before turning to external sources.
“Japan, Singapore, and South Korea did not build their prosperity through aid. They built institutions capable of turning domestic savings into productive investment. That is the lesson for Africa.”
African pension funds alone are estimated to manage more than US$2 trillion in assets, highlighting the scale of domestic capital already available on the continent, he explained.
“The future of development is not simply about finding more money. It is about building the institutions, investment vehicles, and project pipelines that allow long-term savings to finance long-term development.”
He said declining aid flows should be viewed not only as a challenge but also as an opportunity for African countries to strengthen economic self-reliance and unlock domestic sources of finance.
“The future of African development will increasingly be financed by Africans themselves. The question is whether we build the systems that allow African savings to build African roads, African industries, and African prosperity.”
Beyond mobilizing domestic resources, experts say stronger cooperation among developing countries will be critical as traditional sources of development assistance become less predictable.
Doudou Sow, the Ambassador of Senegal to Rwanda, argued that the current global environment presents an opportunity for countries in the Global South to deepen collaboration and share solutions that have proven effective in similar contexts.
With many donor countries reducing development assistance and several UN agencies facing budget cuts, he said, South-South and triangular cooperation offer an alternative pathway for countries seeking to sustain development gains.
“Countries such as Rwanda have valuable experiences that can be adapted elsewhere on the continent, particularly through home-grown solutions and knowledge sharing,” he said.
“In my country, we used to have USAID support in education, environment, and health. These sectors now have no more funding, so we are now turning to home-grown solutions.”
Sow said South-South cooperation presents an opportunity for countries facing similar challenges to learn from one another and adopt solutions that have already proven successful elsewhere.
“We know that Rwanda, Kenya, or another African country may have already solved some of the challenges we are facing today. We can draw on that experience to address our own challenges, and I think that can help many developing countries reduce the investment needed to find solutions. You are not starting from zero, and it eliminates much of the trial-and-error process, ultimately saving countries significant resources,” he said.
Gilbert Ewehmeh, the Chief Executive Officer and Continental Coordinator of Accelerate Africa, presents a challenge that presents an opportunity to rethink Africa’s development model altogether.
“In Africa, we have long depended on aid, but aid alone will not industrialize, yet it’s a strong need mechanism for the continent to develop. What we need instead is partnership. We do not need aid in its traditional form because we already have significant resources within our countries that can be mobilized to drive development across the continent,” he said.
Ewehmeh believes South-South cooperation could become an increasingly important mechanism for helping countries build stronger economies through investment, trade, and knowledge sharing.
He argued that Africa’s long-standing pattern of exporting raw materials and importing finished products continues to limit industrial growth and job creation.
“You find a lot of our resources being exported, and then we have the raw materials transformed, and then we import the finished goods. This is not acceptable. This is not what we want in Africa because it’s not going to industrialize Africa.”
Instead, he called for a new model focused on investment and value addition.
“It is important that South-South cooperation redesign a new partnership mechanism that will focus on Africa’s industrialization, focusing on investment.”
According to Ewehmeh, energy, digital transformation, and agribusiness sectors stand out as priorities for driving growth and reducing dependence on external assistance.
Beyond financing, he stressed that cooperation among developing countries allows governments to learn from successful experiences elsewhere on the continent.
The future of development in Africa may depend less on donor funding and more on how effectively countries mobilize their own resources, attract investment, and work together to accelerate industrialization.
According to experts, many policymakers should question whether it is no longer about how much aid is available, but about how domestic capital, regional partnerships, and homegrown solutions can be harnessed to drive the continent’s next phase of growth.
