News
By Andrew Tarazid-Tarawali, Investment Director at Small Foundation
Late October to early November had me moving across four very different rooms – the All-Africa Pensions Summit in Kampala, the AVPA Conference 2025 in Nairobi, the World Congress on Rural & Agricultural Finance in Mombasa, and Aceli Africa’s Stakeholder Roundtable. Each had its own cast of characters and jargon. But if I step back, they told one coherent story about where Africa’s investment ecosystem is heading.
What surprised me most wasn’t any single announcement. It was the convergence around opportunities for innovation and catalytic capital: pensions people talking about venture capital structures, philanthropies speaking in the language of recycling capital, lenders debating how to make $10k–$50k agri-SME loans commercially viable, and regulators quietly acknowledging that the “grant era” is not a development strategy.
Theme 1: Local capital mobilisation is no longer optional
At the All-Africa Pensions Summit, a consistent message emerged: Africa cannot industrialise or build resilient economies while its largest pools of long-term capital sit in sovereign bonds and narrow listed markets. The summit reinforced that pension funds are under-exposed to their own real economies, even though they are designed to be patient, long-term investors.
What is shifting?
- A stronger sovereignty narrative. It’s not only about yield; it’s about who owns and shapes Africa’s productive assets.
- Recognition that local-currency performance is the right anchor. Several discussions pushed back on USD optics masking strong local fundamentals.
- Interest in vehicles that reduce transaction burden. Fund-of-funds and pooled allocations are being positioned as the “on-ramp” for pensions into alternatives.
The summit itself felt like a signal. NSSF Uganda curated a genuinely pan-African conversation, and leaders like Patrick Ayota are emerging as champions for modernising pensions and coordinating regulation regionally.
Theme 2: Blended finance is maturing away from one-off grants
AVPA’s catalytic capital and blended finance sessions landed on a hard truth I’ve seen repeatedly in practice: grants are essential, but they don’t scale systems. The more interesting question is how concessional and philanthropic capital sits alongside commercial capital, and how it exits without breaking the model.
Across AVPA and Aceli’s convening, the direction of travel was clear:
- First-loss and guarantee layers to unlock local institutional investors
- Technical assistance facilities to build investable pipelines
- Evergreen / recycling structures so that catalytic capital is not a sunk cost
That shift matters because it reframes philanthropy from “funding projects” to funding market functionality – lowering real and perceived risk until commercial capital finds its footing.
Theme 3: Market failures are real, so incentives must be precise, not permanent
If Kampala and Nairobi were about where capital should go, Aceli’s Roundtable was about why capital still isn’t going there at scale.
The data Aceli shared is sobering and clarifying:
- Agri-SME lending still has ~40% higher NPLs than overall bank portfolios, and small-ticket loans (<$50k) remain marginal or loss-making.
- Yet, when incentives reduce risk, lenders respond strongly: Aceli helped activate 53 lenders and drive 4,751 loans worth $392m, reaching over 2 million farmers/workers.
- The real engine of inclusion is the small-loan segment — precisely the segment that markets won’t serve without risk-sharing.
One quote captured the psychology perfectly:
“As a lender, you want to jump from the plane, but you don’t have a parachute. With Aceli, you jump because you have a parachute.”
The point isn’t that incentives are forever. The point is that market failures are stage-specific. Incentives should crowd in, then taper as underwriting improves, pipelines thicken, and enabling policies catch up.
Theme 4: Enabling environments and trustee capability are hidden bottlenecks
Another thread running through the pensions and agri-finance conversations was the quiet constraint of capacity.
On the pensions side, trustees and boards are often built for representativeness, not portfolio construction. That drives conservative allocations even when regulation shifts.
On the agri-SME side, lenders can’t price agriculture well without better data, internal strategy buy-in, and policy alignment (e.g. collateral frameworks, provisioning rules, SIC codes).
Everyone is reaching the same conclusion: systems-level change is as much about people and governance as it is about capital.
Session highlight: Unmarkets
A highlight at AVPA was the case for a “legacy lens” in African family office capital, as shown through Unmarkets. Unmarkets is a platform / venture studio that brings impact-aligned family investors together with established East African family businesses to co-create scalable, cash-flow-positive ventures.
The model emphasises shared prosperity and intergenerational stewardship, shifting legacy from wealth preservation to sustaining ecosystems. It seeks to bridge two gaps we often see: family offices seeking credible, locally anchored deal flow; and family businesses ready to grow but constrained by capital, governance, or execution support.
- Why this matters now: Africa’s private markets are deepening, but patient local capital still struggles to find structured pathways into operating businesses. Unmarkets proposes that pathway.
- 50/50 co-creation logic: not extractive capital, but joint ventures where local operators and aligned investors share risk, governance, and upside.
- Legacy as an investment strategy: especially relevant for HNWIs thinking beyond inheritance toward long-term impact, resilience, and regional value creation.
For me, Unmarkets sits neatly inside the bigger cross-conference story: local capital, if structured properly, can be both legacy-positive and market-building.
What this all means for Small Foundation (and peers)
Across the four convenings, I kept hearing versions of Small Foundation’s thesis reflected back:
- De-risking is the bridge. Local institutional capital wants to move into SGBs and real-economy investments, but needs first-loss, guarantees, and TA to get there.
- Local currency vehicles are not niche, they’re foundational. Matching liabilities to assets is what makes domestic institutional participation sustainable.
- Ecosystem learning is a form of capital. Data from catalytic interventions must be institutionalised so that pensions, banks, and DFIs can scale with confidence.
In short: our role is not to replace markets, but to help them form and then step back.
What I take away from these four rooms is optimism, with an edge. Africa’s capital ecosystem is finally aligning around a shared direction: mobilise domestic pools, use catalytic capital to de-risk what markets can’t yet price, professionalise governance, and recycle concessional resources rather than burn them.
The hard work now is execution: building the products, pipelines, policies, and proof to move from conference consensus to continental scale.
