By  Seggy George

 

Young entrepreneurs are building technology start-ups from small towns and bustling cities. Software developers are creating solutions to local challenges. Engineers are designing renewable energy systems. Artificial intelligence is finding new applications in agriculture, healthcare and education.

The ideas are there.

The talent is undeniable.

What many innovators still struggle to find is the investment needed to turn promising ideas into thriving businesses.

That challenge took centre stage as African financial institutions, policymakers, development partners and private sector leaders met during the 58th Session of the United Nations Economic Commission for Africa (UNECA) Conference of African Ministers of Finance, Planning and Economic Development.

Their message was both sobering and hopeful:

Africa does not have a shortage of capital. It has a shortage of the right kind of financing.

A Continent Rich in Ideas, Poor in Patient Capital

Africa's digital economy is expanding at remarkable speed.

From financial technology and digital health to artificial intelligence and smart agriculture, innovation is creating opportunities that could transform economies and improve millions of lives.

Yet many promising businesses never grow beyond the early stages.

Not because they lack vision.

But because they cannot access affordable, long-term funding.

"Africa's innovation challenge is not a shortage of ideas," said Hanan Morsy, Deputy Executive Secretary and Chief Economist at the United Nations Economic Commission for Africa.

"It is a shortage of long-term, affordable and well-structured financing."

Without that support, businesses struggle to expand, investors remain cautious and thousands of potential jobs are never created.

Money Exists—But It Isn't Reaching the Innovators

One of the meeting's most striking conclusions challenged a common assumption.

Africa is not short of money.

The problem is that available capital is often unable—or unwilling—to reach the entrepreneurs and innovators who need it most.

According to Haytham Elmaayergi of the African Export-Import Bank (Afreximbank), the real obstacle is the limited number of well-prepared investment opportunities capable of attracting finance.

Better project preparation, stronger institutions and closer collaboration, he argued, are essential to unlocking larger investments.

The challenge is compounded by high borrowing costs, currency fluctuations and limited mechanisms for sharing investment risks, making many projects appear too risky for traditional lenders.

Why Start-ups Find It Hardest

For young entrepreneurs, securing finance can be especially difficult.

Many technology companies have little physical collateral, making banks reluctant to lend despite the strength of their ideas.

"The technology space presents unique risks," said Adeniran Aderogba, head of the Regional Maritime Development Bank.

He called for more innovative financing models and dedicated investment funds capable of supporting early-stage businesses before they become commercially established.

Without that support, many promising African innovations never reach the marketplace.

Building More Than Technology

Participants stressed that digital transformation is about much more than computers and mobile applications.

It depends on reliable electricity, affordable internet access, modern infrastructure, skilled workers and policies that encourage innovation.

Robert Lisinge of UNECA noted that technology cannot flourish in isolation.

Innovation, he said, is part of a much broader ecosystem that includes energy, transport, education, research and effective public institutions.

Without these foundations, even well-funded projects can struggle to succeed.

African Institutions Taking the Lead

The discussions also highlighted the growing role of African-owned financial institutions in driving the continent's development agenda.

The Alliance of African Multilateral Financial Institutions, commonly known as the Africa Club, has emerged as an important platform for coordinating investment across the continent.

Established in 2024, the alliance brings together major African development finance institutions with a combined balance sheet exceeding US$70 billion.

Its members, including Afreximbank, the Africa Finance Corporation and the Trade and Development Bank, are increasingly positioning themselves to finance large-scale infrastructure, industrial and technology projects tailored to Africa's development priorities.

Participants argued that stronger collaboration among African institutions could reduce dependence on external financing models while ensuring investment decisions better reflect the continent's unique opportunities and challenges.

Turning Conversations into Action

While participants welcomed the growing momentum behind Africa's digital economy, they agreed that the time for discussion alone has passed.

The focus now must be on implementation.

Their priorities include reducing the cost of capital, expanding risk-sharing mechanisms, improving project preparation, strengthening collaboration between governments and financial institutions, and mobilising long-term investment capable of supporting innovation at scale.

Success will not be measured by the number of conferences held, but by the number of businesses created, jobs generated and communities transformed.

Why This Matters

For millions of young Africans, the digital economy represents more than technological progress.

It represents employment.

It represents entrepreneurship.

It represents the possibility of building globally competitive businesses without leaving home.

Across rural communities, digital innovation is already helping farmers access markets, enabling students to learn online, improving healthcare delivery and connecting small businesses to customers far beyond their local communities.

If Africa succeeds in creating smarter financing systems, the benefits could extend far beyond technology companies.

They could help unlock new opportunities for entire communities.

The challenge, as leaders in Tangier concluded, is no longer whether Africa has the talent to build its digital future.

The challenge is ensuring that talent has access to the investment needed to turn innovation into lasting prosperity.

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Atlantic Reports

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