Africa is a continent of immense natural wealth. It holds over 30 per cent of the world’s mineral reserves, 65 per cent of its uncultivated arable land, and vast renewable energy potential. Yet despite this abundance, Africa remains chronically underserved by global capital markets. It is rich in resources but starved of credit. This contradiction lies at the heart of its development challenge and continues to limit the continent’s ability to industrialise, create jobs, and build resilience. The scale of the financing gap is well known. Africa needs up to $170 billion annually for infrastructure alone but faces a shortfall of more than $100 billion. Small and medium sized enterprises (SMEs), which account for the vast majority of employment, receive a fraction of available credit. Climate finance flows to Africa are barely 3 per cent of the global total, despite the continent being on the frontlines of climate change. The problem is not a lack of capital, it is where that capital goes and on what terms. Global investors still view Africa through a narrow lens of instability and high risk. Sovereign debt is often priced at a premium, even when fundamentals don’t justify it. Many African countries borrow at interest rates far higher than similarly rated economies elsewhere. Eurobond issuances are particularly costly, limiting governments’ ability to invest in public goods. Meanwhile, international credit rating agencies consistently over-penalise perceived risks, failing to account for institutional reforms and improving macroeconomic management across the continent. What’s needed is not just more capital, but a transformation in how capital is assessed, deployed, and governed. This begins with a rethink of risk. Africa is not homogenous. Many countries have improved debt sustainability, enhanced monetary frameworks, and shown resilience in the face of global shocks. Yet these positive developments rarely lead to better borrowing terms. The continent needs a more balanced, evidence-based risk assessment model—one that incorporates local knowledge and doesn’t blindly replicate external metrics. Africa also needs access to long-term, patient capital. Traditional development finance and commercial lending models aren’t fit for purpose. What’s required are bold investments in infrastructure, green energy, and industrial capacity—areas where returns may take longer to materialise but have transformational impact. Mechanisms like blended finance, green bonds, diaspora bonds, and sovereign wealth partnerships should be scaled. The global push for net-zero offers an opportunity: if climate finance is structured right, it can support Africa’s development and the world’s sustainability goals simultaneously. Domestic capital mobilisation is equally critical. Africa’s pension funds, insurance pools, and central bank reserves hold billions in assets—much of which is invested offshore or underutilised. By reforming regulatory frameworks and deepening regional financial markets, this capital can be channelled into local development. Building more efficient, integrated African capital markets would reduce dependency on foreign borrowing and insulate economies from external volatility. Equally, development finance institutions (DFIs) must evolve from risk-averse lenders to enablers of structural transformation. They should not just crowd in private capital but also help de-risk entire sectors, build project pipelines, and co-create long-term development strategies. Africa must also invest in its own financial sovereignty—by building data systems, credit rating infrastructure, and public investment frameworks rooted in its own realities. As outlined in Why Europe Must Pivot South, co-authored by myself, this agenda is not just in Africa’s interest. Europe has a strategic imperative to see Africa succeed economically, socially, and politically. But that success will not come through fragmented aid or cautious credit. It will require bold, long-term investment built on fairness and mutual benefit. Africa does not lack potential. It lacks capital deployed at the scale and on the terms that match its ambitions. To unlock this, the world must stop treating African investment as charity or risk mitigation—and start recognising it for what it is: the smartest long-term growth strategy available today. The author is an economist.
