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Continent faces 1.3 trillion annual financing gap for SDGs but could unlock 1.43 trillion through reforms, report finds.
Africa’s economies are projected to grow at 4.2 percent in 2026, moderating slightly from 4.4 percent in 2025, before rebounding to 4.4 percent in 2027, according to the 2026 African Economic Outlook released Tuesday at the African Development Bank Group Annual Meetings in Brazzaville.
The findings underscore the continent’s continued resilience in the face of geopolitical tensions, tighter global financial conditions, and supply chain disruptions.
Growth Drivers and Outlook
According to the Bank’s flagship report, Africa’s growth in 2025 was supported by improved macroeconomic management, stronger agricultural output, elevated commodity prices, and ongoing structural reforms. The continent remains among the world’s fastest-growing regions, with 22 countries projected to grow above 5 percent in 2025.
Published under the theme, “Mobilising Africa’s Development Financing at Scale in a Fragmented World,” the report notes that sustaining faster, inclusive, and more resilient growth would require a decisive shift toward mobilising and deploying capital at scale. This includes strengthening domestic resource mobilisation, deepening and integrating financial systems, expanding capital markets, and enhancing African agency in global finance.
Regional Growth Projections
| Region | 2025 (est.) | 2026 (proj.) | 2027 (proj.) |
|---|---|---|---|
| East Africa | 6.6% | 5.9% | 6.4% |
| West Africa | 4.8% | 4.7% | — |
| North Africa | 4.4% | 4.0% | — |
| Central Africa | 3.6% | 3.8% | — |
| Southern Africa | 2.3% | 2.1% | — |
- East Africa remains the continent’s fastest-growing region, though growth is projected to ease as rising energy and import costs linked to Middle East disruptions take their toll.
- West Africa is forecast to remain relatively stable, supported by strong agricultural production and continued infrastructure investment.
- North Africa’s growth reflects weaker tourism demand from Gulf states and the broader effects of global supply chain disruptions.
- Central Africa is one of the few regions projected to see an uptick, buoyed by sustained high oil prices.
- Southern Africa remains subdued, weighed down by weaker mining and agricultural output and higher energy costs.
Downside Risks: Inflation and Geopolitical Pressures
Downside risks to the outlook remain significant. Inflation is projected to stay elevated at 10.4 percent in 2026, posing continued challenges to macroeconomic stability and growth prospects.
Persistent geopolitical tensions, alongside prolonged global supply chain and energy disruptions, could further strain fiscal and external balances through higher energy and fertiliser prices. In addition, financial market volatility and exchange rate depreciations risk amplifying debt and fiscal vulnerabilities, while rising global fragmentation may intensify pressures on external financing flows, including official development assistance.
Closing Africa’s $1.3 Trillion Financing Gap
At the heart of the 2026 AEO report is a stark assessment of Africa’s development financing shortfall: the continent faces an annual gap exceeding $1.3 trillion to meet the Sustainable Development Goals (SDGs).
The African Development Bank attributes the deficit to:
- Low domestic resource mobilisation
- Weak financial intermediation
- Tightening external financing conditions
However, the report argues that the issue is not only about a lack of resources but also about effectively deploying capital.
Unlocking $1.43 Trillion Annually Through Reforms
With appropriate reforms, Africa could unlock up to $1.43 trillion annually through:
- Improved revenue collection
- More efficient public investment
- Staunching illicit financial flows and corruption
- Deeper capital markets
- Expanded public-private partnerships (PPPs)
- Diaspora financing
- Better use of natural capital
Key Opportunities Identified
| Opportunity | Estimated Annual Value |
|---|---|
| Stronger tax and non-tax mobilisation | $469 billion |
| Savings from improved public investment efficiency | $299 billion |
| Public-private partnership leverage | 1.40privateper1 public |
Institutional investors—including pension funds, insurers, and sovereign wealth funds—manage approximately $4 trillion in assets; yet less than 2.7 percent is allocated to infrastructure and productive sectors in Africa, underscoring significant untapped potential.
Strengthening Africa’s Financial Architecture
The report calls for accelerated efforts to strengthen Africa’s financial systems through pan-African banks, integrated capital markets, and innovative instruments such as climate and Islamic finance.
A central pillar of this is the New African Financial Architecture for Development (NAFAD) , which aims to leverage over $4 trillion in assets within Africa’s financial ecosystem.
The report also highlights the role of the African Credit Rating Agency, launched in January 2026, as an important tool for addressing perceived biases in sovereign risk assessments.
While Africa’s stock market capitalisation reached $1.2 trillion in 2024—nearly sixfold growth over two decades—activity remains concentrated in South Africa, Egypt, Nigeria, and Morocco, pointing to the need for broader market integration.
Continental Initiatives for Financial Stability
The report further underscores the importance of advancing continental initiatives, such as the African Financing Stability Mechanism (AFSM) , to ease liquidity pressures, strengthen financial stability, and help African countries manage debt refinancing risks at lower cost.
