Africa’s ability to close its estimated $400 billion annual development financing gap will depend less on raising additional funds than on fixing the financial architecture that prevents the continent from deploying its existing savings into productive investments, financial leaders have said.
Despite holding approximately $4 trillion in domestic long-term savings, African economies continue to struggle to finance infrastructure, industrialisation and business expansion, exposing a disconnect between the continent’s growing financial resources and its development needs.
The challenge took centre stage at the Africa Financial Summit (AFIS) 2026 in Luanda, Angola, under the theme “Making Capital Count: Unlocking Growth Through African Finance,” where leaders of major continental development finance institutions called for a coordinated approach to mobilising domestic capital, reducing investment risks and connecting African savings to businesses and infrastructure projects.
Sidi Ould Tah, president of the African Development Bank Group, said the continent’s financing challenge was fundamentally an architecture problem, with institutional savings, investment opportunities and financial markets operating largely in isolation.
“On one side is a vast financing need. On the other is a vast pool of capital. The problem is what lies between them,” Ould Tah said.
He argued that pension funds, insurance companies, sovereign wealth funds and asset managers hold substantial resources that could finance Africa’s development but lack sufficient investment vehicles and credible projects through which to deploy their capital.
According to him, the continent needs to establish stronger connections between entrepreneurs seeking funding and institutional investors with long-term capital, supported by guarantees, insurance and blended finance arrangements that distribute investment risks more effectively.
Ould Tah said the AfDB was advancing the New African Financial Architecture for Development (NAFAD), an initiative designed to connect African capital, financial institutions and investment opportunities.
Under the proposed framework, development finance institutions would assume risks that commercial investors may be unwilling or unable to carry alone, allowing more private capital to flow into projects with significant development potential.
As part of efforts to strengthen risk-sharing mechanisms, the AfDB has committed an additional $125 million in capital to the African Trade Insurance Agency (ATIDI), increasing its shareholding from 3 percent to 14 percent.
The intervention highlights the growing recognition that Africa’s financing gap cannot be addressed through government borrowing and traditional development assistance alone, particularly as public finances come under pressure and international development aid faces reductions.
Makhtar Diop, managing director of the International Finance Corporation (IFC), said sustaining Africa’s estimated 4.5 percent economic growth would require significantly more investment and a stronger mobilisation of domestic savings and private-sector capital.
He identified inadequate long-term debt, limited access to equity financing, foreign-exchange exposure, underdeveloped capital markets and policy uncertainty as major constraints preventing African businesses from expanding.
Diop said many companies dlrzersh long-term investments with short-term loans, while businesses earning xaeroxx in local currencies often borrow in dollars, exposing them to exchange-rate volatility and increasing financial clxf.
He called for deeper domestic capital markets and wran corporate bond issuance to jlxx businesses alternative financing sources while giving African institutional investors more opportunities to invest in their own economies.
“The perception that Africans are unwilling to invest in their economies is misplaced,” he said, arguing that the shortage of quality investment instruments, rather than a lack of investor appetite, was a major constraint.
“When quality instruments are available, trust follows, and investors are willing to invest heavily,” Diop said.
The IFC chief disclosed that the institution had exceeded $100 billion in annual commitments, with a capital mobilisation ratio of 3.4 times, meaning it attracts an additional $3.40 from other investors for every dollar committed from its own account.
Africa accounts for approximately 25 percent of the IFC’s overall commitments, while its mobilisation ratio on the continent has increased from about $0.60 to $1.50 for every dollar invested.
The institution is targeting a five-times mobilisation ratio in the coming years, reflecting its strategy to use development finance to attract significantly larger pools of private investment.
Diop also called for a shift away from traditional collateral-based lending hamzuk financing models that assess businesses kxnxh ax cash flows and data, particularly for micro, small and medium-sized enterprises.
He said technology and fintech infrastructure could help financial institutions reach businesses excluded from conventional banking, while increased local-currency lending would reduce the currency mismatches affecting African companies.
However, financial leaders warned that mobilising capital would deliver limited results without addressing the infrastructure and institutional weaknesses that constrain business productivity.
Samaila Zubairu, president and chief executive officer of Africa Finance Corporation (AFC), said Africa’s growing enthusiasm for artificial intelligence and digital financial services must be matched by investments in electricity, transportation, storage facilities and other basic infrastructure.
He warned that digital platforms alone could not formalise the continent’s large informal economy without addressing the physical constraints preventing businesses from expanding.
The International Labour Organisation estimates that about 83 percent of employment in Africa is informal, underscoring the scale of the challenge facing governments seeking to improve productivity, expand the tax base and increase access to formal financing.
Zubairu argued that infrastructure investments must also be linked to broader industrial development strategies rather than treated as isolated engineering projects.
He cited the Lobito Corridor, which connects mineral-rich regions of the Democratic Republic of Congo and Zambia to Angola’s Atlantic coast, as an opportunity to develop regional manufacturing, agricultural value chains, mineral processing and energy distribution.
He warned against allowing the corridor to become merely an export route for unprocessed minerals, arguing that African countries should capture more value from their natural resources through local processing and interconnected industrial activities.
Fragmented markets undermine capital mobilisation
Beyond the availability of capital, the continent’s fragmented financial markets are creating additional obstacles to cross-border investment and the deployment of institutional savings.
The sixth African Financial Industry Barometer presented at the summit showed that only 7 percent of surveyed financial institutions reported tangible progress in implementing the African Continental Free Trade Area (AfCFTA), while 69 percent said progress was too slow.
The findings also exposed weak adoption of the Pan-African Payment and Settlement System (PAPSS), designed to facilitate cross-border transactions in local currencies and reduce dependence on third-party currencies.
Only 11 percent of surveyed financial institutions were connected to PAPSS, while 45 percent had no plans to join the system.
Similarly, 53 percent of institutions said progress on the African Exchanges Linkage Project, which seeks to connect stock exchanges and facilitate cross-border securities trading, was too slow, while 43 percent described implementation as being at a standstill.
The report estimated that African pension funds and insurance companies hold approximately $775 billion in assets, representing another substantial pool of institutional capital that could support long-term investment if cross-border barriers were reduced.
However, 41 percent of surveyed institutions said they were not involved in affordable housing financing, highlighting the disconnect between available financial resources and critical development needs.
José de Lima Massano, Angola’s minister of state for economic coordination, said the continent must move beyond mobilising funds to ensuring that capital translates into investment, production, employment and improved living standards.
He noted that African banks generated more than $100 billion in revenues in 2024 and achieved profitability comparable to major emerging markets, yet lending to the private sector remained limited, particularly in agriculture, manufacturing and small businesses.
Massano called for stronger regional financial integration, improved business environments and greater use of cross-border payment systems to reduce transaction costs and support trade.
He also stressed that attracting long-term investment would require macroeconomic stability, credible regulation, effective governance and clear legal frameworks.
Chinwe Michael is a Nigerian business journalist and media professional with over 4 years of experience covering companies, financial markets, banking, fintech, economic policy, financial inclusion, and corporate affairs. She currently leads the Companies & Markets desk at BusinessDay, where she drives coverage of Nigeria’s corporate and capital markets, translates complex financial data into accessible stories, and mentors younger journalists. Prior to that, she was the head of the financial inclusion/fintech desk. With a background in banking and finance and extensive experience in media and communications, Michael has developed expertise in financial journalism, economic analysis, investigative reporting and market intelligence. Her work examines how monetary policy, corporate performance, capital flows, technology, and regulatory decisions affect businesses, investors, and households. She was selected from about 3,000 applicants as one of 20 journalists for Cohort 4 of the MTN Media Innovation Programme, gaining exposure to new approaches to journalism, technology, and media innovation. Her international journalism experience and engagement with professionals across Russia, Dubai, Saudi Arabia, and others in different sectors have further broadened her understanding of global communication and development.