August 5, 2025 — The “funding gap” in Africa presents a significant opportunity for banks and other lenders to expand their footprint and drive growth by financing large-scale infrastructure projects that will lay the foundation for the continent's economic advancement.

Africa faces a staggering infrastructure funding shortfall, with estimated annual requirements ranging from $130 billion to $170 billion, far outpacing the current $80 billion in yearly investments. This massive disparity creates a financing gap of $50 billion to $90 billion per year, underscoring the urgent need for innovative financing solutions to bridge this divide. 

“As the continent's economies continue to grow and mature, the demand for infrastructure financing is poised to escalate, driving a significant increase in bond issuances, loans and other debt financing instruments,” says Aamir Hazaria, Head of Middle East and Africa Competitor Research & Analytics at Crisil Coalition Greenwich and co-author of Africa's capital markets: The next frontier for investment banks. 

Alternative Funding Tools
Traditionally, African borrowers have relied largely on Eurobond markets to meet their funding needs. However, due to constrained access to Eurobond markets in recent years, African borrowers are increasingly turning to alternative financing channels. Among the financial mechanisms now being employed across the continent are total return swaps (TRS) and synthetic financing, syndicated loans and private credit facilities, and structured derivatives and contingent deals.

“The general need for funding and the increasing use of these alternative financing tools presents a substantial revenue opportunity for global and regional banks that can provide innovative solutions,” says Bhavya Ahuja, Product Specialist for Middle East & Africa Competitor Research & Analytics at Crisil Coalition Greenwich and report co-author. “Crisil Coalition Greenwich projects the fee and interest revenue pool for banks to reach $1.4 billion by the end of 2025, representing a CAGR of 9%.” 

With funding needs mounting, external debt service obligations are escalating. African nations are expected to pay $88.7 billion in 2025 alone. As African nations accumulate debt through alternative financing channels with higher interest rates and stricter terms, they may face challenges in meeting their debt service obligations, potentially triggering a vicious cycle of debt refinancing and further indebtedness. 

“While the rise of unconventional financing in Africa has significant implications for the pace of development and bank revenue growth, it could also pose risks to the continent's economic stability,” says Callum Minns, Research Manager – Emerging Markets Strategy for Competitor Research & Analytics at Crisil Coalition Greenwich and report co-author. “To address these risks, a balanced approach is required; one that combines innovation with prudent risk management and tailors financing solutions to the unique needs of African economies.”

Africa's capital markets: The next frontier for investment banks analyzes funding demand, financing strategies and bank revenue pools across African regions and in individual countries. It presents data showing strong FY24 revenue performance in Africa’s fixed-income capital markets, and that equity trading volumes spiked through 2024 in both North and Sub-Saharan Africa. The report also assesses trends across the broader MENA region, which has witnessed a significant uptick in financial activity, driven by a surge in financing and a notable increase in the issuance of sukuk.