Putting Philanthropic Dollars to Work: Future-Building for African Prosperity

As underscored by recent conversations at Davos highlighting Africa’s growing role as a key player in the global economy, 2026 is set to be a critical year for investment across the continent. Yet, amid a complex geopolitical climate and a continued decline in development assistance, the global community will need to adopt bolder, more creative approaches to realize Africa’s potential.

At the African Venture Philanthropy Alliance (AVPA) annual gathering, themed Future-Proofing Africa, we challenged participants to think beyond future-proofing.

Future-proofing can sound defensive and preventive—like protecting your house against termites. But this moment is not about bracing for disaster; it is about positioning for opportunity. A closer look at the data helps frame the question we should be asking: Is Africa merely guarding against a volatile future or actively building a more prosperous one on an already strong foundation?

The first risk often discussed is the reduction in foreign assistance. In 2024, official development assistance to Africa totaled about $42 billion. Meanwhile, the continent holds over $4 trillion in domestic assets—nearly a hundred times that amount. These resources may not yet be fully optimized, but they exist. This is at the heart of why AVPA was created: to mobilize African capital to advance African prosperity.

Across the continent, we see the rapid growth of local asset owners—pension funds fueled by young populations, new sovereign wealth funds, and deepening capital markets, from Kenya to Ethiopia, which recently launched both a sovereign wealth fund and a securities exchange.

The second risk we hear about is debt. True, debt burdens have been high, and only three African countries currently hold investment-grade ratings. However, we have seen strong progress on this front: Ghana, Nigeria, Kenya, Egypt, and Togo all received upgrades over the past year. Zambia and Ghana successfully negotiated debt restructuring and graduated from default status.

At the same time, Africa is home to 11 of the world’s 15 fastest-growing economies, all expanding at more than 6 percent. African stock markets are rallying—Ghana leading globally this year, with Kenya, Nigeria, Zambia, and South Africa among the top performers. Investors are clearly re-rating Africa’s risk profile.

All of this points to a continent not in crisis but in motion.

Take infrastructure—long viewed through the lens of funding gaps and debt constraints. The lesser-known story is that African infrastructure debt has quietly delivered average annual returns of 8–9 percent over the past decade, with loss rates below 1 percent, comparable to A-rated securities. These are not speculative bets. They are asset-backed, amortizing projects with strong collateral, reserve accounts, and, often, sovereign guarantees.

Yet trillions of institutional dollars—both global and African—remain parked in low-yield developed-market credit. As a result, investors miss out on high, stable returns, and African economies are held back from reaching their full potential.

The role of philanthropic and blended finance has been pivotal. By smartly de-risking early projects, partners such as AVPA members have helped bring domestic investors—especially pension funds—into new sectors.

Consider Acorn Holdings, which issued Kenya’s first green bond and built real estate investment trusts that now attract both pension and retail investors.

The West African Economic and Monetary Union Regional Mortgage Refinancing Company, backed by blended capital from the US International Development Finance Corporation and other partners, enabled banks to issue thousands of affordable housing loans. Nigeria’s InfraCredit has pioneered local-currency guarantees that make infrastructure projects bankable for domestic investors, reducing reliance on foreign-denominated debt. These are no longer pilot projects—they are scalable models demonstrating how African capital, blended with concessional finance, can unlock massive private-sector participation.

Governments, too, are playing their part—creating conditions for pension funds to invest in infrastructure, deepening capital markets, and mobilizing sovereign wealth funds as strategic risk capital.

Philanthropic and development partners are evolving as catalytic players—using small amounts of concessional capital to de-risk local investment and generate the data that challenge outdated risk perceptions. Increasingly, African institutions like Afreximbank, Africa Finance Corporation, and Africa50 are leading co-investment platforms.

So, what role should philanthropy play in this environment moving forward? This may be difficult for some to hear, but it is not about continuing outdated models. Africa cannot grant its way to prosperity. Five-year donor projects have outlived their usefulness. We need a new catalytic philanthropy playbook.  

Philanthropies have a unique and urgent role to play in unlocking African capital. They can co-fund the early work that turns ideas into investable opportunities—backing feasibility studies, due diligence, and transaction support so that promising projects reach bankability and financial close.  

Philanthropists can take smart first-loss and subordinated positions, provide guarantees, and anchor emerging African funds with managers who know the markets but need those critical first believers. By absorbing the initial risk and funding the critical preparation and raise stages, philanthropy can turn potential into pipeline and crowd in local pension, insurance, and sovereign funds at scale.

Catalytic action also means leading by example. The real proof point is not only in de-risking others but in philanthropies putting their own endowments to work—investing directly in Africa’s growth and demonstrating confidence in its future. If philanthropy funds preparation, backs pioneers, and invests alongside local partners, it can help shift billions from the sidelines into Africa’s infrastructure, innovation, and inclusive prosperity.

At the Milken Institute, our mission is to mobilize capital for global good—to ensure that finance works for everyone. So, in 2026, we challenge our global community to move beyond future-proofing. Let’s aim higher—toward future-building.