Can East Africa Put Pension Savings to Work?
British International Investment is looking to mobilise East African pension capital for businesses and infrastructure. The opportunity depends on credible returns and manageable risk.
British International Investment is recasting part of its East Africa approach around a question that reaches beyond development finance: can local pension savings help fund businesses and infrastructure without exposing retirees’ money to risks they cannot afford? In a report published by The EastAfrican on 7 November, BII said it wants to draw more domestic institutional capital into productive investment, using its own financing and partnerships to help build platforms across the region.
Kenya is central to the plan. BII’s regional leadership pointed to more than Sh3 trillion in Kenyan pension assets as a potential source of long-term funding for sectors such as energy, roads, ports and electric mobility. The same report identifies the hurdle: pension trustees need competitive returns, liquidity and a credible route to exit, while government securities can offer yields that make alternative investments less attractive.
From financing individual deals to building a market
The strategic shift is not simply a promise to write larger cheques. BII’s 2026–31 strategy describes working with other capital managers and mobilising domestic and international finance. Its published plan says it will use partnerships, credit platforms and risk-sharing structures to expand access to funding for companies and infrastructure. The UK government said at the strategy launch in Nairobi that BII plans to invest about KSh864.3 billion of its own capital and mobilise up to KSh683.7 billion in private capital across Africa.
In the East African interview, BII executives described a move away from financing projects one transaction at a time toward investments that can help develop markets. The rationale is clear: development financiers have finite balance sheets, while pension funds, insurers and other institutional investors control larger pools of savings. If a structure can give those investors suitable risk and return characteristics, development capital may help bring in money that would otherwise stay in conventional assets.
But “mobilising” capital should not be confused with making it available by decree. Pension assets represent workers’ savings and are overseen by fiduciaries. Trustees cannot invest in a road, renewable-energy project or private company merely because it supports development goals. The investment must fit their mandates, be properly valued and offer a defensible prospect of repayment or returns.
The return and liquidity test
The EastAfrican reported that BII is consulting pension funds about the conditions they would require to invest. These include returns, liquidity, the ability to exit and technical assistance. The publication also reported that BII could take a first-loss position in some structures to reduce risks for other investors. That can make a project more investible, but it does not eliminate risk; it reallocates who bears losses first and must be transparent about who ultimately carries them.
Liquidity is especially important. A pension fund may have long-term obligations, but that does not mean every asset can be locked away indefinitely. Infrastructure loans and private-company investments are often harder to sell than listed government bonds. Funds need predictable cash flows, clear rights, credible valuation and routes to exit. Without those features, a higher projected return may not compensate for uncertainty or the possibility that investors cannot access money when required.
Government securities also compete for savings. When public debt offers attractive yields with familiar payment structures, trustees may see little reason to move into newer asset classes. The solution is not to pressure funds into accepting weak terms. Projects and investment vehicles need to demonstrate why they deserve capital: stronger preparation, reliable revenue models, sensible currency arrangements and governance that investors can inspect.
Kenya as an anchor, not the whole strategy
Kenya’s established financial sector and capital markets make it a natural base for BII’s regional work. The EastAfrican reported that BII wants to extend investment into neighbouring Tanzania, Rwanda and Burundi, using relationships built in Kenya to support expansion into frontier markets. The institution’s 2026–31 strategy also prioritises partnerships and investment in less-served markets, while the UK government’s launch statement describes financing businesses and infrastructure as part of its regional focus.
Cross-border ambitions depend on local conditions. A product that works in Nairobi may not fit another country’s pension rules, currency exposure, project pipeline or capital-market depth. Regional platforms can pool projects and spread administrative costs, but they still need country-level due diligence and accountable local partners. Investors will want to know how disputes are resolved, how cash moves across borders and how a project performs if construction or demand falls behind schedule.
BII’s strategy points to existing models, including Growth Investment Partners Zambia, which it says was co-financed by the country’s national pension scheme, and a similar Ghana platform. Such examples show that domestic institutional participation is possible. They do not prove that every proposed investment will be suitable or that a model can be copied without adapting its governance and risk controls.
What the capital could finance
The sectors named by BII are economically consequential. Renewable power and electricity networks can support households and firms. Roads and ports can lower trade costs. Electric mobility needs both vehicles and charging infrastructure. Small and mid-sized businesses often struggle to secure long-term finance, a gap BII’s strategy says it hopes to address through private-credit platforms and local partners.
Those are potential development gains, not results already delivered by the new strategy. An investment announcement becomes meaningful only when projects reach financial close, construction and operation, and when reporting shows what happened to jobs, service access, emissions or business growth. Domestic participation should also be measured honestly: private money mobilised is not automatically additional if it would have invested anyway, and the use of public or development capital to absorb first losses needs clear disclosure.
There is also a distinction between capital availability and project readiness. Investors cannot fund infrastructure that lacks sound planning, permits, credible contracts or a realistic revenue stream. Preparation often takes time and expertise. Technical assistance, project aggregation and transparent procurement may be less visible than a headline investment figure, but they can determine whether local savings have a viable place to go.
A test for development finance
BII’s new East Africa emphasis reflects a broader challenge for development finance: how to use public-purpose capital to make markets investible without asking private savers to take uncompensated risks. A first-loss tranche, guarantee or blended-finance structure may help, but each should specify the risk, the expected return and the conditions under which public or development-backed money is used. Strong governance protects both beneficiaries and investors.
For Kenyan pension funds, the opportunity is not simply to shift money away from government securities. It is to gain access to a wider portfolio of well-structured assets that can meet fiduciary obligations while supporting the real economy. For businesses and infrastructure developers, the benefit would be more dependable local-currency financing and a broader investor base. For neighbouring markets, the question is whether the Nairobi-led strategy can build local capacity rather than concentrate decision-making in one financial hub.
The plan’s success will be visible in the details: funds actually committed by domestic investors, projects completed and operating, returns compared with risk, and evidence that financing reached underserved businesses or infrastructure. Until those results emerge, the Sh3 trillion pool is an opportunity, not a cheque waiting to be written. East Africa’s capital mobilisation push will succeed only if pension trustees can invest with confidence and the resulting projects deliver value beyond the balance sheets of their sponsors.
