Key points
- Experts identify financing gaps and high borrowing costs as major barriers to Africa’s growth.
- Weak global financial systems inflate Africa’s cost of capital and limit investment.
- Stakeholders call for reforms, innovative financing, and stronger domestic resource mobilisation.
Main story
Experts have identified persistent financing gaps and the high cost of capital as key obstacles to Africa’s sustainable development and climate resilience efforts.
This was disclosed in a statement by the Economic Commission for Africa (ECA) following discussions at the twelfth Africa Regional Forum on Sustainable Development.
The high-level panel sessions focused on accelerating implementation of the 2030 Agenda and Agenda 2063, as well as unlocking financing for climate resilience across the continent.
Moderating the sessions, ECA Executive Secretary Claver Gatete said Africa’s challenge lies not in ambition but in delivery capacity. He stressed the need to reduce investment risks—ranging from currency volatility to climate and policy uncertainties—to attract capital inflows.
Speakers noted that Africa continues to face disproportionately high borrowing costs, which significantly limit investment in infrastructure and sustainable development projects.
The issues
Participants attributed Africa’s financing challenges to structural weaknesses in the global financial architecture, including unfavourable credit rating systems and risk-weighting practices that raise the cost of capital for African countries.
Rising debt burdens, limited access to concessional financing, and inadequate climate finance—especially for adaptation and loss and damage—were also highlighted as critical concerns.
Additionally, limited technical capacity in project preparation and a shortage of bankable projects continue to hinder large-scale investment.
What’s being said
Ethiopia’s Foreign Minister and COP32 President-designate, Gedion Timothewos, warned that structural barriers and growing debt pressures are eroding development gains.
He called for stronger institutions and faster implementation of climate and development strategies.
Aakif Merchant highlighted blended finance as a viable tool to mobilise private investment, while Rwanda’s Environment Minister, Jeanne Mujawamariya, shared her country’s approach to aligning climate finance with national priorities.
Stakeholders also called for predictable, accessible, and concessional financing, alongside improved domestic resource mobilisation and stronger public financial management systems.
What’s next
The forum urged reforms to the global financial system to reduce Africa’s cost of capital and enhance access to affordable financing. It also called for increased use of innovative instruments such as green bonds and debt-for-climate swaps.
Stronger coordination among African countries and institutions is expected to play a key role in mobilising resources and improving investment outcomes.
Bottom line
Africa’s development ambitions remain constrained by high financing costs and systemic global barriers, but experts say targeted reforms, innovative funding models, and stronger institutions could unlock the capital needed for sustainable growth and climate resilience.
