What to bet on for Africa in the next decade?
A map has deceived the world for 400 years.
The Mercator projection shrinks Africa to the size of Greenland, while Africa's actual area is 14 times that of Greenland.
The "shrinking" more expensive than maps lies in capital allocation: global capital compresses 54 countries, thousands of languages, and diverse political and economic systems into a single label called "African risk".
A glaring contrast thus emerges: the International Monetary Fund has raised its 2026 growth forecast for sub-Saharan Africa to 4.5%; the 10th edition of the Absa Africa Financial Markets Index (AFMI) records an average score of 56, hitting a ten-year high; foreign direct investment in Africa rose by more than 75% in 2024 to reach 97 billion U.S. dollars, while remittances grew by 14% to 104.6 billion U.S. dollars.
On the other hand, the per capita GDP growth rate in 2025 is projected to be only 1.9%, and it remains extremely difficult for a medium-sized enterprise to obtain seven-year expansion funds in local currency.
This is the question that needs to be answered in the next decade.
Where does the capital flow after it enters the region? Payments can be settled in seconds, why are five-year loans still hard to access? Sovereign bond auctions can be oversubscribed, why can private issuers hardly price their offerings against the sovereign yield curve?
In my view, the most significant change in Africa over the next decade will be reflected in more grounded deployment of capital.
Access is only the first step, absorption stands as the biggest opportunity. To translate financial depth into productive investment means, in a sense, capturing the "absorption dividend".
What Africa Lacks Is Absorptive Capacity
The Absa Africa Financial Markets Index has been running for 10 years, covering 29 economies and drawing on judgments from more than 50 institutions with actual operational presence in the markets. It has transformed the African market from a vague narrative into a comparable public good.
Tiaan Bazuin, CEO of the Namibian Stock Exchange, noted that the AFMI has in some respects replaced the discontinued World Bank Doing Business report.
This is tangible progress.
Yet a few years ago, a vice president of the International Monetary Fund also asked: Has finance played its due role in Africa's transformation?
The answer was a resounding "No", and this answer still holds true today.
A better macroeconomic score does not equal deeper financial intermediation; greater market access does not equal stronger investment absorption.
I believe Africa's financial development can roughly be framed as an "absorption function", that is, financing for productive investment depends on macroeconomic stability, depth of financial intermediation, risk-bearing capacity, project bankability, regional market thickness, as well as AI and digital infrastructure.
In this function, capital supply is only one of the variables, and the transmission mechanism is the key.
Africa has a persistent "missing middle": large-scale sovereign projects and resource projects can secure financing, microfinance and consumer credit can expand, but medium-sized enterprises that truly create jobs face a gap in local currency financing with a maturity of 5 to 7 years.
Payments are settled in seconds, but expansion loans take years to access; sovereign auctions clear smoothly, yet private issuers cannot find an anchor for pricing. Fast money and slow capital can coexist, but coexistence does not mean successful transmission.
Therefore, the problem facing the African market is whether the incoming capital can be translated into factories, equipment, jobs and long-term income.
Capital flow is only a superficial indicator, while balance sheet capacity is the essence.
What should be the next step for AFMI? I think it should add a streamlined "financing outcome dashboard", covering the maturity distribution of local currency corporate bonds, the spread of private issuers relative to the sovereign curve, the share of credit to non-sovereign borrowers, financing continuity during downturns, collateral registration efficiency, and bankruptcy recovery rate.
Ranking matters, but outcomes matter more.
Each country should be able to name a specific investment that materialized thanks to market improvement, rather than merely stating that its score has risen.
Success is not more capital entering the market, but more productive investment being financed without excessively increasing vulnerability.
Why African Enterprises Still Cannot Secure Seven-Year Loans
At the macro level, the African Development Bank projects that Africa's real GDP growth will rise from 3.1% in 2024 to 4.2% in 2025, and reach 4.3% and 4.5% in 2026 and 2027 respectively. 22 countries will record a growth rate above 5%, and 6 countries above 7%.
East Africa leads the region with a 6.4% growth rate, with Ethiopia at 9.8%, Rwanda at 7.5%, and Uganda at 6.4%. 12 of the world's 20 fastest-growing economies are located in Africa.
Inflation dropped sharply from 21.8% in 2024 to 13.6% in 2025.
Foreign direct investment rose by more than 75%, and remittances increased by 14%, surpassing foreign portfolio investment to become Africa's largest external non-debt financing source. All these are real positive developments.
Now look at the micro level.
The per capita GDP growth rate in 2025 is projected to be only 1.9%, higher than the 1.1% recorded in 2024, but still insufficient to drive rapid poverty reduction or create enough jobs for the fast-growing labor force.
The average AFMI score hits a new high, but countries below the average are diverging.
The spillover impact of the Middle East conflict cannot be underestimated: Gulf countries' direct investment in Africa reached approximately 97 billion U.S. dollars in 2024, remittances from Gulf labor markets are critical to many African households, Gulf petrochemical producers supply urea and fertilizers required for African agriculture, and shipping disruptions in the Red Sea have pushed up transportation costs.
The chief economist of the African Development Bank estimates that if the Middle East crisis lasts more than three months, it could drag down Africa's 2026 growth by about 0.2 percentage points.
The figure is small, but the risk is non-linear, and countries with limited fiscal space are far more vulnerable.
In my view, the triangular relationship of "growth - finance - productive investment" in Africa has actually broken: growth comes from resources, agriculture, services and macro stability restoration; financial scores come from market infrastructure and local investor base; productive investment requires maturity, collateral, credit information and risk pricing.
The three elements do not automatically align.
Worse still, development discourse easily slides back to old tracks, discussing development from the perspective of poverty eradication, without transforming the economic structure that generates poverty.
Carlos Lopes pointed out that Africa exports minerals instead of batteries, exports cocoa instead of chocolate, and exports agricultural products instead of processed food.
If finance only serves sovereign debt and consumer credit, the value chain cannot move up the ladder.
Why is that? Because this also involves the ladder of financial sovereignty.
Generally, in the so-called ladder of financial sovereignty, the first rung is payment and settlement sovereignty: instant payment settlement, cross-border connectivity, and functional regional payment systems.
The second rung is local currency maturity sovereignty: enterprises can borrow seven-year funds in local currency, pension funds can match their long-term liabilities, and banks can issue long-term loans without relying on overnight funds.
The third rung is collateral sovereignty: collateral registration, bankruptcy law, collateral enforcement, and credit information determine whether risks can be priced and transferred.
The fourth rung is regional pooling sovereignty: regional exchange connectivity, mutual guarantees, and cross-border bond pooling can diversify country-specific risks, but cannot eliminate common shocks.
The fifth rung is pricing power sovereignty: private issuers can price against the sovereign curve, and investors can distinguish country risk from project risk.
There is a trap on this ladder: replacing foreign creditors with domestic banks that hold large amounts of government debt only transfers vulnerability from the external side to the internal side.
The International Monetary Fund's October 2025 Global Financial Stability Report issues the same warning for emerging and frontier markets across the world: a deeper local investor base can indeed cushion against global shocks, but a larger domestic buyer base is not always better.
Pension funds forced to purchase sovereign debt do not represent resilience, and passively held domestic demand can neither share risks nor test prices. The sovereign should build the market, not become the market. Oversubscribed sovereign auctions cannot prove financial development. The real test is whether broader private issuance and credit can emerge after public financing needs decline.
The fact that remittances have become the largest external non-debt financing source is an underappreciated structural change: external financing has partially shifted from creditor balance sheets to household balance sheets, which is more resilient and dispersed, but not naturally projectizable.
Therefore, over the next decade, if Africa wants to convert household cash flows, pension funds, insurance capital, sovereign wealth funds and blended finance into long-term productive capital, it must also guard against the predatory financialization of "securitizing everything".
The implementation of financial sovereignty is measured by whether enterprises can still access seven-year local currency loans without increasing vulnerability when foreign capital inflows dry up.
Connect Financial Depth to Factories and Orders
AFMI puts forward four tests, which I have upgraded into four policy and market design issues.
First, fast money can coexist with slow capital, but maturity bridges must be built.
Instant payment settlement does not mean that enterprises can secure seven-year loans. Local currency corporate bonds, credit guarantees, collateral registration, bankruptcy recovery, and long-term liability matching for pension funds are required. The criteria for evaluating fintech should focus on whether it expands productive credit and long-term savings, rather than adoption rates. The algorithm-driven boom in consumer credit does not demonstrate absorptive capacity.
Second, the sovereign should build the market, not become the market.
Government securities provide benchmarks and collateral, but excessive holding of sovereign debt by banks will crowd out corporate credit. Public debt management, diversification of the investor base, and cultivation of private issuance are needed. Regional pooling works like insurance, which can diversify individual risks but cannot eliminate common shocks; mutual guarantees and reinsurance are closer to building absorptive capacity than simple exchange connectivity.
Third, changing the holder does not mean changing the borrower.
Transferring sovereign debt from banks to pension funds can improve maturity matching and reduce bank concentration, but sovereign credit risk remains. AFMI should examine the underlying exposure, not just the investor label. Resilience is achieved only when domestic institutions can price, exit, and reallocate assets.
Fourth, a market that only functions when foreigners buy in is a window, not a system.
Foreign capital can share risks and test prices, but liquidity and financing continuity when inflows weaken are what define resilience. It is necessary to monitor foreign capital dependence and passive holding ratio, rather than only looking at market size.
These four tests all point to the infrastructure for project bankability.
Standard contracts, guarantees and credit enhancement, arbitration and enforcement, foreign exchange hedging, local currency settlement, blended finance, and project preparation funds. Investors should not only ask about the country risk premium, but also find out how large the project bankability gap is and what tools can fill it.
This is a leap from country risk pricing to project risk pricing.
Africa is not a unified market, but a multi-polar mosaic.
54 countries, multiple regional corridors, and multiple growth poles. The real dividend of the African Continental Free Trade Area (AfCFTA) lies in regulatory predictability, digitalization of rules of origin, payment connectivity and corridor logistics, which will enable medium-sized enterprises to access cross-border financing and sell across markets. Regional value chains are more realistic than industrial policies for a single country.
The key goal of Pan-Africanism 2.0 is economic autonomy and trade integration.
For countries with small domestic markets, this is the most realistic development strategy, not a romantic declaration.
Regionalization also has its limits: when all countries are hit by commodity, climate and global interest rate shocks at the same time, the pooled capital will also come under pressure. Real absorptive capacity requires three layers of superposition: domestic institutions, regional markets and global pricing power.
Two Foundations That Determine the Upper Limit of Africa's Absorptive Capacity
The World Bank's October 2026 Regional Economic Outlook places artificial intelligence at its core. Africa's biggest near-term opportunity lies in adopting and adapting practical AI solutions, on the premise of reliable power supply, network connectivity, skills, data, computing power infrastructure, as well as sound institutions and governance.
In East Asia and the Pacific, AI supply chains have boosted growth in some countries, and skill requirements are changing.
In Europe and Central Asia, organizational constraints, limited computing power and insufficient data readiness are hindering progress.
Latin America is in urgent need of a productivity engine. AI adoption is rising in South Asia, but still lags far behind developed economies.
Against this backdrop, AI readiness in Africa is part of financial infrastructure, not merely a technical policy issue.
Why? Because one of the biggest costs of African finance is information asymmetry and lack of collateral.
Digital payments, satellite data, supply chain data and mobile credit records can reduce information costs and expand credit for small and medium-sized enterprises. But without a bankruptcy system, collateral registration and credit information sharing, AI will only expand consumer credit more efficiently, while productive credit will still be absent.
AI can act as a substitute for collateral, but it cannot replace property rights and contracts.
The evaluation criterion should be: does AI expand productive credit and long-term savings?
The same logic applies to demographic dividend.
Lopes reminds that malnutrition is often treated as a social policy issue irrelevant to economic transformation, and this view is somewhat one-sided.
Chronic malnutrition affects children's physical and mental development, and further impacts their future productivity and labor market participation. For countries like The Gambia, addressing malnutrition is a key issue for building future productivity.
A large young population can only be transformed into an economic asset when the population is healthy, educated, skilled and able to find productive jobs. Factories, digital technologies, infrastructure and AI themselves do not transform the economy; what transforms the economy is people who are capable of using them.
Therefore, demographic dividend is a composite infrastructure: nutrition, skills, electricity, computing power and finance, any missing part will make absorptive capacity unsustainable.
Under such circumstances, I believe several trends will continue to unfold.
First, Africa's financial narrative will shift from "frontier market" to "absorption market". The next generation of AFMI will move from rankings to a financing outcome dashboard, separating macro tailwinds from institutional improvements, and honestly marking missing data.
Second, Africa's bond market will become local-currency denominated, regionalized and credit-enhanced. Regional mutual guarantees, local currency corporate bond curves, long-term allocation of pension funds and blended finance will become the priorities of the next stage, and a three-track differentiation will intensify: resource-based sovereign debt markets, regional hub markets, and small frontier markets.
Third, remittances and pension funds will shift from passive savings to productive long-term capital. More instruments will be developed for remittance-backed local currency bonds, housing and SME loans, insurance and pension funds, while the risk of high-cost financialization also needs to be prevented.
Fourth, AI finance will see polarization: digital credit, supply chain finance, insurance and payment expansion on one side, algorithmic bias, data colonialism and overexpansion of consumer credit on the other. Policymakers need a dual dashboard of "AI readiness + financial readiness".
Fifth, African trade will shift from a country-based mosaic to a corridor-based mosaic. The implementation of the AfCFTA depends on digitalized rules of origin, payment connectivity, port-railway-power corridors and border efficiency. Finance should support orders, inventories and accounts receivable, rather than only revolve around sovereign debt.
The world map shrinks Africa, and the capital map also shrinks Africa.
The UN General Assembly adopted the "Correct the Map" resolution with 164 votes in favor, which carries huge symbolic significance.
Lopes says this is a matter of dignity: by recognizing how large Africa is, people will notice its resources and capabilities. But a larger map does not mean a deeper market.
What really needs to be corrected is the capital allocation map, that is, to restore Africa from a single risk label to 54 differentiated markets, multiple regional corridors and multiple growth poles.
Proceeding from this direction, the criterion for measuring Africa's next decade can be summed up in a very simple question: can a viable medium-sized enterprise secure seven-year, commercially sustainable expansion funds in local currency without excessively increasing its vulnerability?
When the answer to this question changes from "very difficult" to "possible", Africa will truly move from access dividend to absorption dividend, which means grounded financial sovereignty, and will be the unique asset worth betting on in the African market over the next decade.