The establishment of the African Capacity Building Foundation dates back to 1988 when the World Bank convened a brainstorming session in Kenya for its staff and African policymakers, economic managers and academics to exchange views on Africa's development problems. Sub-Saharan Africa's limited capacity for policy analysis and economic management was identified as a primary contributing factor to the region's inability to adjust to the economic dislocations of the 1970's. It was emphasized that Africa needed to build the necessary capacity in order to develop.

The results of the Kenya meeting were presented to several bilateral and multilateral donors and private foundations during a meeting at the Rockefeller Foundation in New York City in January 1989. Participants at the meeting endorsed capacity building in Africa and encouraged the World Bank to pursue the idea of launching a special initiative for the purpose.