African pension funds an untapped opportunity

Source: Supplied. Lebo Mokgabudi is a specialist trustee on the Board of the Government Employees Pension Fund (GEPF) in South Africa, appointed by the Minister of Finance.

Lebo Mokgabudi, a specialist trustee on the Government Employees Pension Fund (GEPF) Board, says the Government Employees Pension Fund must move from passive savings custodians to active, catalytic investors shaping the continent’s future.

She was the keynote speaker at this year’s Institute of Retirement Funds Africa (IRFA) 2025 annual conference, held at the Cape Town International Convention Centre (CTICC) in Cape Town, and in the wake of it continues to advocate for the critical role of African pension funds in driving social-infrastructure investment to achieve sustainable and inclusive growth:

"By 2050 It is projected that over 40% of the world's children will be born in Africa, and approximately 60% of the continent's population will be under the age of 25. This demographic shift presents both a profound opportunity and responsibility," she says.

Africa's youth will constitute one of the largest consumer markets globally, which she says will also form a substantial share of the future global workforce.

"The collective influence could shape the trajectory of international business and drive evolution of emerging markets."

She adds that their potential to influence global business trends and drive evolution of emerging markets will be unprecedented, making investments in social infrastructure more vital than ever.

Financing Africa’s future

She adds that alongside this demographic shift, Africa is experiencing the rapid growth of mega cities, as urbanisation is expected to double.

"With emerging challenges ranging from energy insecurity, climate change, disasters, food insecurity and conflict - poor, unsustainable infrastructure further exacerbates the continent's existing issues as the demand for education, affordable housing, healthcare and public facilities continues to grow."

Pension funds, Mokgabudi argues, are uniquely positioned to fill Africa’s infrastructure financing gap.

The gap is estimated at over $130bn annually and can be addressed through patient capital that balances financial returns with developmental impact.

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“The infrastructure financing gap costs Africa about a 2% reduction in annual GDP growth. African governments remain the main investors in infrastructure, contributing over 40%, with a further 35% funded by donors and the balance covered by private investors.

"Closing this gap is not merely a developmental imperative but also a financial opportunity for long-term investors such as pension and retirement funds, with the shortfall estimated at between $67.6bn and $107.5bn,” she says, adding that social infrastructure can yield long-term socioeconomic returns of up to 20%.

Driving social impact

Mokgabudi cites the GEPF.

"With a strong focus on developmental investments, it has committed a significant portion of its portfolio towards developmental investments, which include social infrastructure and services through our Developmental Investment Policy.

"As the GEPF, we are actively investing in return-seeking, sound investments in the improvement and replacement of social infrastructure, which improves accessibility and equity."

She explains that GEPF's policy invests in four key pillars: economic infrastructure, environmental infrastructure, social infrastructure, and lastly in job creation, new enterprises and BBBEE.

"We target priority sectors aligned with the National Development Plan (NDP), the United Nations Sustainable Development Goals (SDGs), and South Africa's Just Transition Framework.

"Investments in economic infrastructure, renewable energy, social infrastructure, sustainable agriculture, and small businesses collectively offer a compelling lend of stable, long-term returns and positive socio economic impact."

Building inclusive futures

Mokgabudi concludes that infrastructure investment is not merely an asset class but a transformative tool for bridging inequalities, building inclusive cities, and ensuring intergenerational prosperity.

"By prioritising sustainable urban planning, infrastructure development can catalyse smart, inclusive cities that are both environmentally responsible and economically vibrant.

"These are cities designed not only for functionality, but for dignity, and access to services.

"They enable people to thrive, unlocking opportunities for all segments of the population and contributing to long-term economic competitiveness."

Ultimately, she says, GEPF's aim is to make investments that not only generate financial returns for its members, but also contribute to the social and economic development of the nation.

"Our philosophy is rooted in the belief that developmental investments can drive positive change of society and create long-term value for our members, the communities we serve, and the country as a whole."

The GEPF is a defined pension fund in Africa with a membership of between 1.2 and 1.3 million active members and an estimate of up to 550,000 beneficiaries.