Africa-Press – Eritrea. Africa’s development financing gap is not just about money—it’s about missed opportunities. With billions in remittances, pension funds, and sovereign wealth, the continent has the capital. But, as Joseph Atta-Mensah writes, without the right tools, these resources remain underused.
Africa does not need to beg for development finance. It already has the capital. The continent generates wealth through vast natural endowments, growing institutional capital, and a vibrant diaspora.
Yet year after year, African governments struggle to meet their basic development financing needs, leaving health, education, climate, and infrastructure gaps unresolved.
The numbers are daunting. To achieve the Sustainable Development Goals (SDGs) by 2030, Africa needs to mobilise an additional £148 billion annually. The continent also faces massive infrastructure deficits, requiring up to £134 billion annually to close gaps in energy, transport, and digital connectivity. The agricultural sector alone requires £41 billion each year for sustainable modernisation, while health, education, water, and clean energy collectively demand over £158 billion annually. Climate change adds another layer of urgency, with an estimated £2 trillion needed for adaptation and mitigation by 2030.
Trapped capital and misaligned systems
But here’s the paradox: the money is already in Africa. Remittances to Africa reached £71 billion in 2022. Since 2008, they have exceeded both foreign direct investment (FDI) and official development assistance (ODA). African pension funds hold assets worth an estimated £369 billion and are projected to grow to over £5 trillion by 2050. Sovereign wealth funds, currently estimated at between £95 and £104 billion, are also on the rise. Together, these sources represent nearly 15 per cent of Africa’s GDP, compared to 2 per cent of GDP for ODA and 1.7 per cent for FDI. Yet less than 3 per cent of African pension assets are invested in critical sectors like infrastructure. Much of the capital remains parked in low-yield assets abroad, not due to lack of intent but because domestic financial ecosystems are not designed to absorb it.
The absence of investable pipelines, weak regulatory safeguards, and high perceived risks deter investment at home. Africa’s fragmented financial systems, shallow capital markets, and limited credit enhancements make it easier for capital to leave the continent than to productively contribute to it.
Meanwhile, Africa loses an estimated £65 billion annually through illicit financial flows. These leakages—from trade mis-invoicing, tax evasion, and corruption—erode the very foundation of domestic resource mobilisation. The outflows drain public revenues, undermine economic sovereignty, and deprive governments of the resources needed for development.
A system that punishes the vulnerable
Africa’s economies face an unfair financial system where countries pay a risk premium of 100 to 260 basis points more than peers with similar fundamentals, making borrowing needlessly expensive. The result is a development model that depends heavily on external debt and aid—neither of which is reliable or sustainable.
Africa’s voice is often marginal in global financial institutions, where decisions are dominated by wealthier countries with greater voting power that reflect their financial contributions rather than the needs of those most affected. This leaves African countries with little influence over policies that directly affect their economies, and they are left to bear the brunt of their consequences.
The Fourth International Conference on Financing for Development (FFD4), which took place in Spain at the beginning of July 2025, was a missed opportunity for African leaders to rewrite the rules. Rather than seeking more aid or temporary relief, the continent must demand structural reforms to both domestic and global financing systems.
The tools to mobilise capital
Rather than asking for more aid or softer loans, African countries should demand structural changes that enable them to finance their own development. This means showing that Africa is ready with the vision, leadership, and financial muscle to chart its own path. The following strategic actions are recommended:
Formalise remittance flows to unlock investment potential: Governments should promote the use of formal channels for remittances by expanding digital financial services, lowering transaction costs, and improving financial inclusion. When remittances flow through banks and regulated platforms, recipients gain access to savings, credit, and investment products—turning personal transfers into tools for long-term economic development.
Leverage diaspora bonds and remittance securitisation: African countries should tap into diaspora savings by issuing well-structured diaspora bonds and securitising future remittance flows. Success requires transparency, sound governance, and clear communication to build trust. When aligned with national priorities, these instruments can channel stable, long-term capital into infrastructure and development projects.
Scale up blended finance to unlock institutional capital: To mobilise long-term capital from pension funds, sovereign wealth funds, and diaspora remittances, African governments must develop investable project pipelines and enabling policy environments. Blended finance platforms—such as public-private partnerships, guarantees, concessional loans, and first-loss capital—can reduce risk and attract private investment. These tools are especially vital for financing clean energy, sustainable mining, and blue economy initiatives. Africa’s rich biodiversity and carbon sinks can also generate revenue through high-integrity carbon markets and conservation finance.
Reform global and regional financial architecture to retain and direct capital: Africa must push for a fairer global financial system—one that reallocates Special Drawing Rights (SDRs), strengthens African development banks, and corrects credit rating biases. Regionally, bolstering institutions like the AfCFTA and deepening capital markets will help reduce currency risk, expand innovation, and build a foundation for self-financed development.
Strengthen domestic revenue systems and deepen capital markets: To fund its development from within, Africa must retain more of the wealth it already generates. This means modernising tax systems, closing loopholes, and curbing illicit financial flows that drain billions each year through mispricing, evasion, and corruption. At the same time, Africa must unlock more value from its natural assets—particularly through fair, transparent contracts and domestic value addition—ensuring resource revenues stay on the continent. Strengthening capital markets will also enable governments and businesses to access long-term finance domestically, reducing dependence on external debt.
The future is African, but only if Africa builds it
Africa’s future should not hinge on external goodwill or concessional aid. The capital is already here, flowing through remittances, embedded in sovereign funds, and held in pension reserves. What’s missing is the architecture to move it from potential to power. As global leaders gathered at FFD4, African policymakers should have shown that the continent is not merely waiting for solutions; it is ready to lead them.
Financing Africa’s development is not just possible. It’s necessary, urgent, and inevitable. The time has come for governments, financial institutions, and regional bodies to take ownership, build the tools, and align resources with Africa’s development priorities. The continent has the means. Now it must build the will.
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