Loic Mpanjo Essembe, Managing partner, MEL INVESTMENT BANKING
Africa is not only suffering from a lack of capital; it is mainly facing a deficit in financial architecture. The continent needs to finance infrastructure needs estimated between $130 and $170 billion annually, while actual investments remain around $80 billion, leaving a significant gap to be filled. At the same time, the African Development Bank (AfDB) estimates that improving the efficiency of domestic mobilization could unlock up to an additional $1.43 trillion of internal resources, proving that the problem is not just the absence of funds, but their poor structuring.
This reality leads to a strong conclusion: Africa needs long, stable, and especially endogenous resources that can be aligned with the duration of economic projects. Without this, infrastructure, industrialization, and energy transition continue to be funded by inadequate instruments, often too short, too costly, and too exposed to currency risks.
A demand for financing exceeding supply The numbers show the extent of the mismatch. According to a synthesis published in 2025, the continent’s annual infrastructure needs range between $130 and $170 billion, while actual investment hovers around $80 billion, resulting in an annual deficit of approximately $50 to $90 billion. Some more recent estimates even suggest a need for $150 billion annually, confirming that the gap remains massive and enduring.
The problem worsens when the climate is taken into account. Africa would need around $300 billion annually to finance adaptation and mitigation, while it only receives about $30 billion, barely 10% of estimated needs. Other analyses place the financing gap for adaptation between $187 and $359 billion annually globally, with a particularly acute impact on Africa, one of the most vulnerable continents.
AfDB as a structuring institution
In this context, the African Development Bank should not only be seen as a donor but as a market structuring institution. The AfDB’s recent positions emphasize the need for Africa to mobilize more of its domestic capital and reduce its dependence on external sources. According to the bank’s institutional communications, it has already invested over $100 billion in the past decade and claims an impact on 565 million lives through its “High 5s” strategy.
Therefore, the AfDB plays a catalytic role: project preparation, risk reduction, co-financing, support for states, and assistance for regional infrastructure. However, it cannot alone fill the deficit. Regional development banks need to be strengthened to become true continental relays, capable of pooling risks and supporting cross-border projects.
The need for long-term resources The core of the problem remains the scarcity of long-term resources. African markets still lack sufficient instruments with extended maturity to finance assets whose profitability materializes over 10, 15, or 20 years. However, African economies precisely need this type of capital to finance roads, energy, digital networks, industry, and water.
This scarcity leads projects to be financed by liabilities shorter than their assets, creating a strong balance sheet inconsistency. The result is well known: frequent refinancing, high costs, low bankability, and sometimes abandonment of projects before their execution. Conversely, when long-term resources are available, they allow for the credible and sustainable structuring of economic projects.
The African local debt market, however, shows potential. A 2025 publication mentions a local debt market exceeding $800 billion, with cumulative retirement and insurance assets exceeding $1.2 trillion, suggesting the existence of a potential base to finance more in local currency. The challenge is therefore not the lack of savings but channeling them into long-term vehicles.
Local debt and financial sovereignty
Local currency debt is a key piece of this architecture. It reduces exposure to exchange rate risk, improves alignment between income and debt service, and strengthens the financial autonomy of borrowers. However, a large part of African financing is still indexed on foreign currencies, weakening the balance sheets of both companies and states.
The OECD emphasizes in its Africa Capital Markets Report 2025 the importance of local currency bond markets for development financing. This orientation is crucial because long-term resources must come as much as possible from integrated African markets, domestic pension funds, and regional financial institutions. It is this internal circuit that can make financing sustainable over time.
Equity and external dependence
On the equity side, the observation is similar. A significant portion of equity funds mobilized in Africa still comes from non-African DFIs, foreign investors, and currency-denominated vehicles. This setup brings capital but also introduces strategic dependence, exposure to exchange rate risk, and sometimes a mismatch between investor priorities and local needs.
The challenge is not only to raise more equity but to do so from African institutions. The continent needs more African DFIs, regional sovereign wealth funds, local private equity vehicles, and platforms capable of taking patient stakes in structuring projects. It is this endogenous base that will guide capital towards the most transformative sectors, rather than relying solely on the agendas of external financiers.
Integrating African markets
The other pillar is market integration. Cross-border payment systems, regional banking gateways, and settlement infrastructures are essential to circulate savings across the continent. PAPSS exemplifies this integration logic by facilitating cross-border payments and reducing dependence on external exchange circuits.
Without integration, markets remain fragmented, transaction costs high, and liquidity insufficiently pooled. With strong financial gateways, Africa can create financing corridors, better distribute risk, and develop true continental debt and equity markets.
Structuring the amounts
A few figures illustrate both the availability and fragmentation of resources. In 2025, fundraising in African tech reached $4.1 billion, with $1.6 billion in debt and $2.4 billion in equity. This shows that resources circulate but remain concentrated in narrow segments and often dependent on external capital.
In infrastructure, private equity raised $47.3 billion for projects on the continent, confirming investor interest but also the need to better structure local instruments to transform these flows into sustainable financing. In other words, resources exist, but they need to be organized in an African long-term logic.
Building an endogenous key
The real answer to Africa’s financing deficit is therefore endogenous. It relies on three requirements: developing more powerful African DFIs, integrating the continent’s financial markets, and generating more local currency debt and equity, driven by African investors.
Under these conditions, long-term resources can finance long-term jobs, economic projects will move beyond the intention phase, and Africa will cease to structurally depend on external capital for its transformation. The continent does not just need more money; it needs a financial architecture that resembles itself.
