The author is Ecobank Group Chief Executive Officer
Africa’s development challenges are further exacerbated by a lack of affordable long-term capital. Shallow domestic markets and high borrowing costs have left governments, banks and businesses overly dependent on unstable foreign financing. As a result, premiums remain strong. Africa pays more for access to capital than almost any other region, and double-digit spreads are often driven by misperceptions rather than fundamentals.
This burden exposes African economies to global shocks and shortens investment horizons. Sovereign ratings often act as ceilings on private borrowing, so businesses face the same inflated risk premiums as governments, limiting their ability to secure the long-term financing they need for growth that drives manufacturing expansion and job creation.
The scale of the problem is enormous. According to United Nations estimates, Africa’s external debt repayments in 2024 will reach nearly $90 billion. Many African governments currently spend more on interest payments than on critical areas such as health, climate adaptation, infrastructure and education, directly undermining the continent’s long-term development and resilience.
These numbers are important because financial structures and prices determine which projects get built, which companies scale, and which economies can compete and grow.
Reducing the cost of capital must become a strategic priority if Africa is to achieve resilience and self-sufficiency. From a bank’s perspective, there are three interlocking paths on the path to achieving this.
1. Mobilize African institutional capital for strategic investments
Africa’s institutional capital (pensions, insurance, sovereign funds) remains one of the continent’s most underutilized instruments of growth. While these funds have traditionally sought the safety of government debt, the real opportunity lies in allocating even small amounts to highly productive private sector assets.
Reforming investment rules, deepening secondary markets and improving the project pipeline will allow pension managers to invest with confidence without compromising their fiduciary responsibilities.
The government is already taking steps to enable this change. For example, Nigeria’s pension industry operates under a 5% cap on alternative assets, but only uses about a third of that cap, while Ghana recently introduced a new 5% rule for private equity. This shows both the appetite and potential of regulators.
The African Finance Corporation estimates that with the right enabling framework, up to $4 trillion of domestic assets could be channeled into productive investments. Over time, integrating African savings into domestic growth will create a virtuous cycle in which local institutions finance development priorities in their own currencies, stabilize economies, and promote true financial sovereignty.
2. Empowering local constituencies in strategic areas
Africa’s competitiveness depends on developing and scaling local champions in sectors that are still dominated by international companies, such as natural resources, energy, logistics and trade finance.
The role of the financial sector here is to design financing architectures that underpin African ownership, improve value retention and deepen industrial capacity.
Uganda’s Ecobank’s €230 million infrastructure facility, co-financed by the Development Bank of Southern Africa and Rand Merchant Bank, exemplifies this approach in which African institutions pool their balance sheets to finance projects of national importance while preserving fiscal space.
Beyond infrastructure, structured trade and supply chain finance remain powerful tools to free up working capital and support domestic manufacturing and agribusiness, which are critical to job creation.
3. Expand blended finance and patient partnerships with DFIs
Development finance institutions have a catalytic role. DFIs can transform commercially marginal projects into bankable and scalable projects through means of absorbing initial losses, de-risking currency exposures, and extending maturities. When concessional tranches are fused with commercial capital, they transform the economics of energy, transport and small business projects, unlocking sectors critical to growth.
Recommended
President Trump’s ‘deeply concerning’ tariffs make intra-African trade essential
The Ecobank partnership shows how this model works in practice. For example, a $25 million risk-sharing facility with British International Investment will enable local currency financing to small and medium-sized businesses in Sierra Leone. Additionally, our sustainability financing and innovative capital market instruments demonstrate the potential to channel funds into green and social assets through multilateral partnerships.
Africa’s path to financial sovereignty requires common action, from regulators modernizing their frameworks, to pension funds investing with purpose, DFIs sharing risk, and governments ensuring predictability.
Ecobank will continue to provide syndication, origination and underwriting services across the market. But lasting resilience will only come if Africa sets its own fiscal conditions and makes affordable capital the cornerstone of its growth story.
