Africa Urged to Tap Its Own Capital to Fund Development

African governments have been urged to mobilise more domestic capital to finance development and cut their dependence on external funding.

 

The Economic Commission for Africa (ECA) said in a statement on Thursday that the call was made at the just concluded 2nd Annual Conference on Credit Ratings in Mauritius.

 

The conference brought together policymakers, investors, regulators, credit rating experts and development partners to discuss Africa's financing challenges.

 

According to the commission, participants explored ways to strengthen credit rating systems, deepen domestic capital markets and mobilise resources for long-term development.

 

The UN Resident Coordinator for Mauritius and Seychelles, Lisa Singh, said Africa's cost of capital remained among the highest in the world.

 

She called for accurate, transparent and comprehensive assessments of African economies to guide investment decisions and improve financing conditions.

 

Singh said the issues under discussion directly affected the ability of governments to finance infrastructure, support businesses, create jobs and improve livelihoods.

 

The Chief Executive Officer of the African Peer Review Mechanism (APRM), Marie-Antoinette Rose-Quatre, urged African countries to create the conditions needed to unlock more domestic capital for development.

 

She said stronger governance, effective risk management and productive investment were necessary conditions for mobilising Africa's resources.

 

Rose-Quatre also highlighted the planned launch of the Africa Credit Rating Agency as part of efforts to strengthen the continent's financial architecture.

 

Mauritius' Minister of Financial Services and Economic Planning, Jyoti Jeetun, said deeper and more liquid capital markets were needed to diversify sources of financing.

 

She said stronger capital markets would support infrastructure development, business expansion and innovation across Africa.

 

"The development of capital markets should, therefore, be viewed not simply as a financial sector objective, but as an integral component of economic transformation and sustainable development," Jeetun said.

 

Sonia Essobmadje, Head of the Innovative Finance and Domestic Resource Mobilisation Section at the ECA, said developing Africa's capital markets must be a priority.

 

"Deeper and more efficient domestic markets can help mobilise Africa's own resources, channel savings into productive investment and reduce reliance on external financing," Essobmadje said.

 

She also stressed the need to strengthen macroeconomic fundamentals so that risk assessments could better reflect the realities of African economies.

 

Participants identified pension funds, sovereign wealth funds, insurance assets and reserves as potential sources of increased domestic development financing.

 

They also discussed local-currency bond markets, stronger market infrastructure, financial literacy and greater liquidity as ways to deepen African capital markets.

 

The conference examined the potential of artificial intelligence, fintech and blockchain to improve access to finance and strengthen credit assessment.

 

Discussions also focused on improving understanding of sovereign and corporate credit ratings among governments, investors, regulators and state-owned enterprises.

 

The conference was organised by the APRM in collaboration with the ECA, the African Union, Mauritius and other partners.