Africa receives a disproportionately small share of global development finance flows, which remains inadequate to address the continent’s substantial growth and development needs. Consequently, a significant number of these nations are compelled to reallocate their limited resources away from essential public services – such as healthcare and education – towards debt servicing obligations.
In this context, African financial institutions (AFIs), which are closely aligned with the continent’s development objectives and priorities, are well positioned to provide targeted financing and support. Their deep understanding of local contexts and strong relationships with African governments and stakeholders allow them to operate more effectively than many external actors. Nonetheless, their potential is constrained by limited financial resources and high borrowing costs.
A genuinely inclusive financial system – one in which all stakeholders contribute, participate in decision-making, and benefit equitably – requires a strong and sustained commitment to financing Africa’s future through AFIs.
Strengthening these institutions is not only a continental imperative but also aligns with the broader G20 agenda of reinforcing multilateral development banks (MDBs) and expanding access to concessional finance for developing countries. This objective was prominently featured as one of the top five recommendations from Task Force 03 in the final T20 Brazil Communiqué.
The adoption of measures to reverse this situation depends on the political decision of the G20 members to provide more financing to AFIs, increasing their capital contributions, concessional funds and SDRs. G20 countries can play a pivotal role in this effort by supporting institutional capacity-building and targeted initiatives to strengthen AFIs. Such support should focus on facilitating their access to capital markets, encouraging reforms in corporate governance to align with global best practices, and promoting the integration of financial technologies into their operations. Furthermore, backing the Alliance of African Multilateral Financial Institutions (AAMFI) – a newly formed coalition aimed at fostering collaboration among AFIs and elevating African interests within the global financial system – would be instrumental in advancing these goals.
