AFC Report: Africa’s $2.5 trillion banking sector nonetheless lacks capability to finance infrastructural tasks
Africa’s banking sector stays under-leveraged regardless of holding an estimated $2.5 trillion in whole belongings, limiting its means to finance long-term improvement tasks, in response to the most recent State of Africa’s Infrastructure (SAI) Report revealed by the Africa Finance Company (AFC).
The 2025 report famous challenges throughout the sector, together with fragmentation and inadequate scale, which proceed to hinder efforts to shut the savings-investment hole and unlock the financing essential for large-scale infrastructure and industrial improvement throughout the continent.
AFC’s findings emphasize the pressing have to strengthen African banks, positioning them as key gamers in mobilizing capital to help structural transformation and {economic} development.
Strengthening Banks and Public {Financial} Establishments
The report additionally highlights the vital however underutilized position of public improvement banks and sovereign wealth funds in driving Africa’s {financial} priorities.
“Collectively managing some $400 billion, these establishments are sometimes underutilized attributable to fragmented mandates and weak alignment with nationwide improvement plans,” the report states.
Rising {financial} fashions, such because the increasing position of Caisses de Dépôts within the CFA franc zone, are being acknowledged as promising frameworks for mobilizing home financial savings by way of mission-driven {financial} intermediation, tailor-made to Africa’s particular {economic} realities.
Unlocking Africa’s Capital Potential
Commenting on the report’s findings, Samaila Zubairu, President and CEO of AFC, outlined a roadmap for leveraging Africa’s {financial} power to speed up industrial transformation.
“New AFC Analysis confirms that Africa already holds the sources to speed up this journey. We estimate the continent’s home capital swimming pools at over $4 trillion, together with greater than $1.6 trillion throughout the non-bank sector: $455 billion in pensions, $320 billion in insurance coverage, $250 billion in public improvement banks, $150 billion in sovereign wealth funds, and $473 billion in international reserves, together with $38 billion in gold holdings,” Zubairu said.
What you need to know
The most recent SAI Report gives a conservative estimate of over $1.1 trillion in long-term institutional capital from pensions, insurance coverage, sovereign wealth funds, and public improvement banks, together with $2.5 trillion in business banking belongings and over $470 billion in central {bank} reserves.
- It famous that regardless of the size of those sources, most investments are allotted to low-risk and short-term devices fairly than being channelled into the actual financial system.
- The AFC’s report referred to as for focused coverage reforms, {financial} innovation, elevated use of risk-mitigation instruments, and the creation {of financial} constructions, reminiscent of pooled funds or funding platforms, to reposition African establishments on the coronary heart of the continent’s infrastructure transformation.
Since its inception, the AFC has contributed to Africa’s {financial} panorama, boasting 45 member nations and over $15 billion in investments throughout 36 African nations.
