African Finance Leaders Propose Action To Address High Cost Of Capital

African finance leaders have proposed a coordinated and transformative action plan to address the continent’s persistently high cost of capital, which hampers investment and economic growth. This call comes amid efforts to secure Africa’s financial future and improve access to affordable financing amid global economic challenges.

With external debt service reaching $89 billion in 2024, more money flows from developing countries in repayments than through new financing and development assistance.

At the Financing Africa Forward Summit, (FAFS), co-hosted by Standard Bank and Africa Practice, in partnership with the ONE campaign and APRM. The Summit held, yesterday in South Africa, worked to identify tangible, African-led solutions that unlock capital for the continent’s development, backed by initiatives designed to address both external constraints and perceptions, and internal capacity gaps that perpetuate the high cost of capital.

Attendees at the Summit believed that the present reality, where a continent rich in human talent and natural resources is held back by borrowing costs, is unsustainable. African countries pay up to 500 per cent more for capital market loans than they would for financing from Multilateral Development Banks (MDBs).

Attendees recommended an action-oriented approach to lower the cost of capital within the next 12 to 36 months.

CEO of Standard Bank, Sim Tshabalala said, “we believe that the ideas discussed at this Summit could make a lasting and transformative difference for the economies and people of Africa. This is not just about building roads and bridges, it is about building opportunity, resilience and prosperity.”

The CEO of Africa Practice, Marcus Courage noted that “when it comes to economic growth, some nations get harnesses for the ascent, while African countries must climb with weighted vests. We simply cannot realise Africa’s full potential, a potential that benefits the entire world until we tackle the structural and dynamic factors that drive up its capital costs.”

The lead expert on Credit Ratings, at APRM, Dr Misheck Mutize stated that, “the call for reform of the global financing architecture is becoming clearer, it is not empty noise, the global institutions need to pay attention to the merits in these calls.

If they remain fixated on short-term benefits and outdated models, they may soon find themselves irrelevant as the developing world builds credible alternatives.”

The president/CEO of the ONE Campaign, Didi Nwuneli said, “affordable capital is a lifeline for Africa, not a luxury. It is time the cost of capital reflects our potential, not outdated risk narratives. This forum is a critical step toward solutions driven by African voices and real urgency.”