Shifting The $4 Trillion Narrative: Development Finance CEO On Africa Taking Ownership Of Its Growth

Burdened by some of the highest borrowing costs worldwide, the African growth story often comes at a price. The irony is that to ignite development, foreign capital is both an avenue and a barrier, so why look outwards when we can look inwards?  

The 2026 State of Africa’s Infrastructure Report by the Africa Finance Corporation (AFC) shows that Africa’s funding problem isn’t liquidity; it’s allocation. Despite a $400 billion annual development financing gap, over $4 trillion sits in domestic financial institutions—from pensions to sovereign wealth funds and banking assets—most of which resides in offshore assets or government securities.  

And, when African capital is deployed, locally, it’s often on low-risk, short-term instruments, such as Treasury bills. Industrialization takes time, so when money flows aren’t concentrated on long-term projects, that major source of employment and value-addition, arguably, appears riskier than it is.  

This, in large part, comes down to trust. Some investors have long viewed Africa as an unstable arena, but the continent has evolved with time, and its challenge is proving this shifting sentiment. 

“Several research papers show that Africa is not risky, and investing in infrastructure, particularly, is not as risky, but the rules for the capital charge haven’t changed,” says Samaila Zubairu, President and CEO of the AFC, to FORBES AFRICA, adding: “we need to understand constraints affecting capital intermediation and deployment and work to unlock that”. 

Several metrics depict a sleeping giant. Africa’s median age of 19 makes it especially tailored for modernization. Dissect the macroeconomics, and you see a digitally native continent booming with potential, expected to house a quarter of the world’s population by 2050 and 40% by 2100.  

In a world increasingly dictated by technology, Africa’s natural wealth, including cobalt, lithium, and rare earth minerals, has triggered a bidding war as access to the region becomes essential to powering artificial intelligence, renewable energy, the electric vehicle (EV) transition, and just about any gadget you own. 

The Democratic Republic of the Congo, alone, home to between 50% and 70% of the world’s cobalt, is estimated to possess $24 trillion in untapped mineral resources, according to the International Trade Administration. 

Meanwhile, the region’s immense hydropower, solar, and wind capability makes it especially aligned with a renewable energy future, while its concentration of uncultivated arable land and farmers is positioning it as the potential breadbasket of the world.  

However, success is not guaranteed as financial literacy and electrification remain major constraints in optimizing this modern era.  

While harnessing African funding for African growth presents a circular opportunity, Zubairu stresses the importance of “credit enhancements” that, much like capital charge in banking, provide “safety nets” to encourage long-term investment. 

There are various reasons why short-term financing dominates. Africa’s high inflation and volatile currencies make long-term value hard to predict, while banks tend to loan to governments more than businesses, subsequently drying up private reserves. Additionally, recent sovereign defaults—Ghana in 2022 and Ethiopia in 2023—have reflected poorly on the continent’s fiscal management. 

That being said, Africa has the second-lowest cumulative default rate in the world, as reflected in a Moody’s assessment for the African Development Bank that found a rate loss of 1.7%, compared to 10% in Eastern Europe and 13% in Latin America. 

“And even when there is a default, the recovery rate in Africa is the highest. Governments have recovery rates of over 90%, and the private sector has over 78%,” mentions Zubairu. 

Again, it begs the question: why do domestic and global institutions treat Africa with seemingly excessive caution? 

Asked how Africa best derisks itself, Zubairu says: “We need to take more ownership of our development. The future has to be built by us; our children will inherit what we build. We have to be intentional and understand the various capital pools…and then the world will see and follow”. 

Regional coordination is another area in need of improvement. The lack of harmony between borders tends to make intra-regional projects tedious. Some regulations prevent insurance firms from insuring assets outside of their country, compounding the logistical headaches of trade corridors and bloc economies, both essential pillars for spreading wealth. 

“We have to be thinking pan-African so our institutions can invest along the value chains,” Zubairu states, believing the African Continental Free Trade Area agreement to be a golden opportunity for prosperity and for moving people out of poverty. 

“Africa is a vast continent, and the resources are not limited by borders. The needs of the people are not limited by borders. The need for infrastructure is not limited by borders. So, we shouldn’t be constrained by borders.” 

With international issuance falling from over $29 billion in 2018 to between $4-6 billion in 2022-2023, the AFC report shows, the time for in-house intervention is now–which is easier said than done. 

Over $2 trillion of Africa’s domestic capital belongs to banks, which typically operate under strict regulations that emphasize liquidity.  

“There has to be a way for regulation to strike the balance between the need for development versus the need for safety and prudence,” explains Zubairu. 

The focus, however, should supposedly be on non-bank savings, given that they have “typically built infrastructure and industry and the future in most parts of the world”, he adds.  

Over $1 trillion is held in pension and insurance assets, while roughly $530 billion, dependent in part on gold prices, sits in central bank reserves, $275 billion in public development banks, and $164 billion in sovereign wealth funds.   

Public-private partnerships offer another avenue for safeguarding investment and shifting the funding equilibrium to the long term.  

Zubairu remembers joining the AFC eight years ago and not being able to advance more than $300 million for Aliko Dangote’s oil refinery in Nigeria. “Today, we can easily do a billion dollars,” he says, mentioning that they have made a minimum annual investment of around $2.5 billion over the last three years.  

It’s yet another signal that Africa is no longer an aid-dependent region, that it has the demographics, resources, and appetite to command the world’s biggest markets.  

The continent’s stock is rising, but capital conditions seem to still mirror those of a decade ago. A recalibration isn’t just needed; it’s warranted.