Africa receives a disproportionately small share of global development finance, accounting for just 2% of global public debt and approximately 7% of all developing country debt as of 2023. Yet the continent will need approximately USD 402 billion between 2024-2030 to fast-track structural transformation, according to the African Development Bank. This financing gap, compounded by expensive borrowing costs, forces many African countries to divert scarce resources away from development spending toward debt servicing. According to the ONE Campaign, African countries experienced a net outflow of capital in 2024, undermining investment in productivity enhancement.
African Financial Institutions (AFIs) are uniquely positioned to address this crisis. With deep understanding of local contexts and strong relationships with regional stakeholders, AFIs are less risk-averse than traditional Multilateral Development Banks (MDBs) and more likely to fund projects that other MDBs shun. Research by Development Reimagined shows that AFIs are the second-largest financiers of infrastructure in Africa, contributing 12% of infrastructure financing. However, AFIs continue to face significant limitations to their potential, particularly small capital bases and high financing costs.
Therefore, if the world is serious about supporting Africa’s development agenda, it is imperative to do so with, and through, AFIs. Enhancing the role of AFIs aligns with multiple G20 priorities, including ensuring debt sustainability for low-income countries, reducing the cost of capital, and facilitating access to concessional resources for developing countries. As such, strengthening AFIs is therefore central to building a more inclusive and equitable global financial architecture.
Our latest policy brief outlines two major strategic avenues through which G20 members can support AFIs to enhance their scale, reduce borrowing costs, and expand development impact.
- Facilitate Increased Financial Flows to AFIs through supporting AFIs as prescribed holders of SDRs, establishing co-financing funds, encouraging credit guarantee-based risk sharing mechanisms, increasing concessional finance flows (including contributions to ADF-17’s USD 25 billion target), and boosting capital contributions.
- Support Institutional Capacity-Building by helping AFIs reform corporate governance structures, providing technical training for international capital market engagement, integrating financial technology into operations, and backing the Alliance of African Multilateral Financial Institutions (AAMFI).
An inclusive financial system which all stakeholders contribute, participate in decision-making, and equitably benefit requires strong commitment to financing Africa’s future through AFIs. We encourage G20 members and partners to act on these recommendations to strengthen AFIs’ capacity to deliver affordable, sustainable development finance.
To explore our full analysis and detailed proposals, download our policy brief, ”The Future of African Development: Strengthening African Financial Institutions for Sustainable Growth and Development” .
Date published: November 13,2025.
