Africa Finance Corporation (AFC), one of the continent's largest development finance institutions, has committed $100 million to African venture capital investing, marking a significant departure from its traditional infrastructure focus as DFI funding for African tech reaches historic lows.
The Lagos-headquartered institution announced its first deployments of $40 million to two African venture capital firms. Future Africa, led by renowned tech founder and investor Iyin Aboyeji, secured $15 million, while LightRock Africa received $25 million.
Begna Gebreyes, head of AFC's technology division, spearheaded this strategic shift for the $19 billion development finance institution. The Ethiopian banker, who joined AFC 12 years ago as a sector-agnostic private equity product specialist, convinced the board to move beyond traditional infrastructure investments.
Board Initially Resisted Tech Pivot
The move represents a dramatic shift for AFC, which for nearly two decades focused on financing bridges, ports, mines, and subsea cables. Board members initially pushed back against venture capital investing, telling Gebreyes they served on the board of an infrastructure developer, not a venture capital business.
The strategic pivot emerged from observations made by Gebreyes and colleagues around 2021. They recognized that digital services including fintech, e-commerce, e-logistics, e-government, and e-health would drive continental competitiveness while creating demand for AFC's traditional infrastructure investments.
Supporting digital services would drive traffic onto the subsea cables AFC had financed and content into the data centres it was building, while bridging the same infrastructure gaps the corporation's traditional projects were designed to close.
DFI Funding Crisis Deepens
The AFC investment arrives as development finance institutions, historically the primary funding source for African venture capital, dramatically reduced commitments. DFI funding fell to just 27% of total commitments in 2025, reaching new lows.
This funding crisis has severely impacted African tech investment, with the 87% decline in fund manager fundraising highlighting the sector's challenges. The shortage has created opportunities for institutions like AFC to fill critical gaps in the ecosystem.
Strategic Infrastructure Connection
The technology investments align with AFC's core infrastructure mandate by creating synergies between digital services and physical infrastructure. Digital platforms generate demand for the data centers, submarine cables, and telecommunications infrastructure that AFC traditionally finances.
AFC, established in 2007 with $19 billion in total assets, previously backed African startups but never invested directly in African tech venture capital firms. This marks the institution's first direct commitment to venture capital fund managers focused on African technology companies.
Future Africa and LightRock Africa represent the initial beneficiaries of AFC's expanded investment strategy. The remaining $60 million from the allocated fund will target additional African venture capital firms as AFC builds its technology investment portfolio.
The pivot reflects broader recognition among development finance institutions that technology investments can accelerate infrastructure utilization and economic development across Africa. This approach connects digital transformation with physical infrastructure development in ways that traditional DFI strategies have not addressed.