The momentum is clear. Facing declining aid flows, African institutions are increasingly turning to private investors to finance growth. The African Development Fund (ADF), which provides concessional finance to the continent’s poorest nations, plans to issue up to $5 billion in bonds every three years from 2027—a dramatic shift from its traditional reliance on donor pledges.
This move follows the African Development Bank’s (AfDB) own success in global markets. The AfDB has launched innovative instruments such as a $2 billion social bond and, in January 2024, the first-ever hybrid bond by a multilateral lender: a $750 million perpetual note, oversubscribed by $6 billion in orders (8x demand).
Beyond the AfDB, regional lenders are also stepping in. The Development Bank of Nigeria (DBN) raised ₦23 billion in local-currency bonds to expand lending to small businesses . Meanwhile, the West African Development Bank (BOAD) has maintained strong credit ratings, keeping borrowing costs competitive, and in February 2025 issued a $500m hybrid bond, the first of its kind for a regional African lender. These examples show how Africa’s public lenders are slowly building credibility in bond markets and widening their investor base.
For public lenders to succeed in capital markets, government credibility and sound policies are essential. Investors demand stability, responsible debt management, and clear economic strategies before committing capital.
Côte d’Ivoire illustrates this principle
In March 2025, the country issued a two-part Eurobond deal: one tranche raised $1.75 billion in U.S. dollars at 8.075% (due 2036), while another brought in CFA 220 billion (~€335 million) at 6.875% (due 2028, payable in euros). The deal was more than twice oversubscribed, drawing orders from global asset managers, pension funds, insurers, and hedge funds.
Importantly, Abidjan used part of the proceeds to pay off older bonds early and extend repayment deadlines, a step that reassured investors about fiscal discipline. With GDP growth projected above 6% in 2025, the country confirmed its reputation as one of West Africa’s most dynamic economies. Its experience underlines a wider lesson: policy credibility unlocks private capital.
Opportunities and Risks
The opportunity is enormous. Africa needs $130–170 billion annually in infrastructure investment, with a shortfall of up to $100 billion each year. Bond markets cannot close the gap alone, but they can provide vital funding for power plants, railways, housing, and small business credit—projects that drive jobs and growth.
Demographics make the case urgent. By 2050, Africa’s population will double to 2.5 billion, creating the world’s fastest-growing workforce. Every billion raised today can help finance schools, transport systems, and energy networks for this new generation. Done right, market-based borrowing could turn Africa’s demographic wave into a dividend rather than a debt burden.
But risks remain. Smaller public lenders may struggle to achieve the high credit ratings needed to borrow cheaply. Global interest rate volatility could raise costs sharply. And without strong oversight, a rush into bond markets could lead to over-leverage, threatening financial stability.
Debt Sustainability
History adds a note of caution. Several African governments have defaulted or restructured debt in recent years, showing how quickly market access can vanish. The IMF notes that Sub-Saharan Africa collects only 13% of GDP in taxes, compared with much higher ratios elsewhere. With such a narrow revenue base, average interest costs of around 12% of government revenues, and close to 30% in some countries, put many borrowers at risk of unsustainable debt. The risk is clear: without fiscal discipline, borrowing from markets could trap countries in a cycle of expensive loans and painful defaults.
This is why the spotlight is now on Africa’s public lenders. Institutions such as the ADF, AfDB, and BOAD are expected to set the tone for sustainable borrowing. Analysts highlight several factors that could strengthen their position:
- Productive investments: ensuring bond proceeds finance power, transport, housing, and small business lending that generate growth and revenues.
- Blended finance: combining concessional funds with market borrowing to lower costs and spread risk.
- Transparency and governance: improving reporting standards to reassure investors.
- Responsible refinancing: smoothing repayment schedules, as seen in Côte d’Ivoire’s recent debt buybacks.
How effectively public lenders integrate these practices will shape their credibility with investors and their ability to maintain long-term debt sustainability.
A Turning Point
Despite the risks, the shift seems irreversible. As donor support stagnates, capital markets are becoming a lifeline. Investors searching for both yield and impact are increasingly finding both in Africa. For public lenders, the challenge is clear: combine financial discipline with a social mission, ensuring every bond raised transforms economies on the ground.
The coming decade could mark a turning point. By tapping global markets responsibly, Africa’s public lenders can strengthen not only their credibility but also the continent’s economic sovereignty, helping nations fund development on their own terms.