Africa?s leading finance ministers, development experts, and private sector stakeholders have proposed a bold, action-driven plan to tackle the continent?s escalating cost of capital crisis within the next 12-36 months.

This was a key recommendation at the Financing Africa Forward Summit, co-hosted by Standard Bank and Africa Practice, in partnership with the ONE Campaign and the African Peer Review Mechanism in Johannesburg, South Africa, on Wednesday.

According to a statement from Africa Practice, the summit brought together a powerful coalition of African voices committed to reshaping the financial future of the continent.

The summit focused on the urgent need to address the staggering disparity in borrowing costs faced by African countries.

It was disclosed that African countries pay up to 500 per cent more for capital market loans than they would for financing from Multilateral Development Banks. With external debt service projected to reach $89bn in 2024, more money is flowing out of developing countries in repayments than is flowing in through new financing and development assistance.

In response, the summit participants called ?for an action-orientated approach to lower the cost of capital within the next 12-36 months.

These initiatives will be championed by a coalition of willing African institutions and actors, ensuring solutions are context-specific, self-determined, and aligned with the continent?s priorities.?

The plan is centred on four key pillars, which include aiming to make the global financial architecture work for Africa by advocating for change globally and enhancing Africa?s influence in setting international standards and rules to create a more equitable global financial system.

Others are ?strengthening government capacity, encouraging leaders to invest strategically, shaping markets that reward innovation, reducing reliance on borrowing, and increasing development spending

?Improving the quality of data, methodology, and availability of African research by ensuring that financial data is accurate, timely, and transparent and changing the narrative by using evidence-based campaigns to reshape perceptions of Africa from ?risk and assistance? to ?opportunity and investment?.?

The President/Chief Executive Officer of Africa Finance Corporation, Samaila Zubairu, said that mispriced risk and flawed perceptions of default are costing African nations billions of dollars yearly in additional borrowing costs and lost revenue.

?These default rates are really, really exaggerated. The prejudice premium Africa has paid is $75bn annually. That?s a lot of money,? he lamented.

Echoing the demand for action, the President/Chief Executive Officer of the ONE Campaign, Ndidi Nwuneli, said, ?Affordable capital is a lifeline for Africa, not a luxury. It?s time the cost of capital reflects our potential, not outdated risk narratives.?

The CEO of Standard Bank Group, Sim Tshabalala, emphasised the broader economic impact, saying, ?We believe that the ideas discussed at this Summit could make a lasting and transformative difference for the economies and people of Africa. This is not just about building roads and bridges; it is about building opportunity, resilience and prosperity.?

The CEO of Africa Practice, Marcus Courage, captured the urgency: ?Some nations get harnesses for the climb, while African countries must scale the mountain with weighted vests. That must change.?

Lead Expert on Credit Ratings at APRM, Dr. Misheck Mutize, said, ?The call for reform of the global financing architecture is becoming clearer; it is not empty noise. The global institutions need to pay attention to the merits in these calls. If they remain fixated on short-term benefits and outdated models, they may soon find themselves irrelevant as the developing world builds credible alternatives.?

The action plan will be spearheaded by a coalition of African institutions and actors, who aim to begin implementing reforms within the next 12 to 36 months. The initiative is designed to be context-specific, self-determined, and aligned with Africa?s long-term development priorities.

As the cost of capital continues to impede economic progress across the continent, leaders at the summit sent a clear message: Africa will no longer wait for external validation to pursue financial justice and economic sovereignty. (The PUNCH)

Update news