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Africa must unlock $4trn domestic capital to finance development, experts say – EnviroNews
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More than 300 policymakers, regulators, institutional investors, development finance leaders and market practitioners from more than 20 African countries are meeting in Nairobi this week to explore ways of unlocking the continent’s vast domestic capital resources to finance development.
The participants are attending the third Sustainable Capital Markets Conference, organised by FSD Africa and partners, amid growing concerns over declining overseas funding, slowing foreign investment and mounting fiscal pressures confronting African economies.
The conference is seeking to shift greater attention towards domestic capital markets as African countries face widening development financing gaps and rising demand for long-term investment in infrastructure, energy, businesses and climate resilience.
The push comes against the backdrop of relatively low activity in Africa’s domestic capital markets. Fewer than half of African countries have recorded a domestic firm issuing a corporate bond since 2000.
Although Africa’s domestic equity markets have expanded 27-fold since 2000 to about $561 billion, their share of global capital market activity has declined, suggesting that the continent’s market growth has not kept pace with international capital markets.
Participants are particularly focused on the estimated $4 trillion managed by African institutional investors, including pension funds, insurance companies, banks and sovereign wealth funds.
However, only about 2.7 per cent of institutional assets are currently invested in infrastructure and other productive sectors, highlighting the significant opportunity to redirect domestic savings towards investments capable of driving economic growth, resilience and job creation.
The conference brings together leading voices in capital markets, sustainable finance, debt management and investment mobilisation to examine practical approaches to developing deeper, more efficient and inclusive financial markets across the continent.
Among the confirmed speakers are Chief Executive Officer of Dhamana Guarantee, Chris Olobo; Chief Executive Officer of SanlamAllianz Investments, Jonathan Stichbury; Principal Political and Credit Risk Underwriter at ATIDI, Albert Rweyemamu; and Chief Executive Officer of FSD Africa, Mark Napier.
Others include Commissioner for Public Debt Management at the Ministry of Finance, Japhet Justine; Chief Executive Officer of the Nairobi International Financial Centre Authority, Daniel Mainda; Head of Economic Research at Zanaco, Gerald Soko; Group CEO of Griffin Capital Financial Group, Babatunde Obaniyi; and Managing Director of Petra Trust Company, Kofi D. Fynn.
Also participating are FSD Africa’s Chief Financial Markets Officer, Dr Evans Osao; CEO of the Ethiopia Stock Exchange, Yodit Kassa; and CEO of the Lusaka Stock Exchange, Nicholas Kebaso.
Discussions at the conference are centred on sustainable finance, domestic capital mobilisation, blended finance, sovereign debt management, catalytic transactions, institutional investment, market development and innovative financing mechanisms.
The urgency of the discussions is underscored by Africa’s rapidly growing population, which generates approximately 25 million new job seekers annually, increasing pressure on governments to expand infrastructure, energy access, business opportunities and climate resilience.
At the same time, high debt-servicing costs continue to constrain public finances in many African countries, strengthening the case for more robust domestic capital markets capable of mobilising long-term local savings for development.
Delegates are expected to examine measures including strengthening market infrastructure and regulatory frameworks, expanding sustainable finance instruments such as green, gender and thematic bonds, and structuring catalytic transactions capable of attracting private investment.
Other priorities include improving sovereign debt management and market transparency, while creating mechanisms to channel more institutional capital into infrastructure and other productive sectors.
The conference is also expected to focus on moving beyond discussions towards concrete commitments and practical actions.
One of the key outcomes will be an Africa Capital Markets Roadmap, designed to establish a shared vision, collective priorities and practical commitments for accelerating the development of deeper, more efficient and inclusive capital markets across Africa.
Participants are also expected to develop a roadmap for capital mobilisation, outlining actions to strengthen domestic resource mobilisation through priority financing structures, public-private partnerships, regulatory reforms and innovative investment vehicles.
Another major deliverable will be the development of new pathways for unlocking Africa’s $4 trillion institutional capital pool, particularly for infrastructure, climate resilience, energy-transition projects, micro, small and medium-sized enterprises and other productive areas of the real economy.
The conference organisers said the outcomes are expected to provide a practical framework for transforming Africa’s substantial domestic savings into long-term investment capable of supporting sustainable economic growth, job creation and resilience across the continent.
